All businesses raise their rates when appropriate, and law firms are no exception. Employees typically receive annual raises, and most firms adjust their billing rates in line with inflation and market conditions, if not every year, then at least every few years.
Yet many lawyers hesitate to increase their rates, particularly with long-standing clients. Over time, however, the economy moves on, costs increase, and a firm’s pricing can quietly fall behind the value it is delivering.
One effective and low-risk way to manage rate increases is to start with new clients. This allows firms to test higher rates in the market without disrupting existing relationships. But eventually, even long-term clients need to be brought in line with current pricing, especially when years have passed since the last adjustment.
In practice, the smoothest rate increases tend to happen at the start of a new year. January or February is ideal, as new budgets are being set and clients are already expecting some changes. Giving advance notice also allows your clients to prepare and, if necessary, pass those costs through to their own customers.
A simple email like the one below is often all that is required:
Subject: Rate Update
Dear [Client],
I hope you are well. As part of my year-end review, I realized that our firm has not increased its rates since [year]. In light of market conditions and rising costs, a modest adjustment to $[X] per hour is warranted.
This new rate will take effect on February 1, 20XX. Please let me know if you have any questions or concerns.
We value our relationship and look forward to continuing to work with you.
Sincerely,
[Lawyer / Law Firm]
This approach gives clients enough notice to update their budgets and adjust expectations. It also opens the door for any concerns to be raised before the new rate takes effect, rather than after.
Practice tip:
The worst thing a law firm can do is not mention a rate increase at all and simply start billing at a higher rate. Clients who receive an unexpected invoice at a higher rate are far more likely to feel frustrated or distrustful, even if the increase itself is reasonable. Clear communication preserves goodwill and protects the relationship.
Why this also matters for how your firm is staffed
When firms avoid rate increases, they often try to protect profitability by pushing more work onto existing lawyers or by hiring permanent staff before the work is truly there. Both approaches increase risk and pressure inside the firm.
Firms that price their work appropriately have more flexibility. They can use on-demand support, contract lawyers, and freelance legal professionals to handle overflow without committing to long-term overhead.
That combination, fair pricing and flexible resourcing, is what allows many firms to grow in a steady, sustainable way.
At Flex Legal, we work with firms that want exactly that: the ability to take on more client work, without overextending their teams or locking themselves into costs they cannot easily unwind.
This blog is for informational purposes only and does not constitute legal advice.
