Do high law firm rates equal high quality?


When Red Bull Founder Dietrich Mateschitz launched his energy drink, he gave it a premium price tag.  

A Red Bull costs four or five times what a Coca-Cola does in a grocery store. When a Bloomberg interviewer asked Mateschitz how he had the nerve to put such a high price on his product right out of the gate, his response was surprising.  

“How would people know it was a premium product,” he said, “if it didn’t have a premium price?” 

People ask some variation of that interviewer’s question about lawyers all the time.  

“Why are lawyers so expensive?” 


Supply and demand for legal services 

Legal services are expensive in general, but there is a broad range of rates that are charged from one firm to the next. The most expensive firms now have rates that are many multiples of more affordable options. Why is that? 

The clear answer is that big national firms charge high rates that climb higher each year simply because they can. Most businesses would do the same. If demand for your services exceeds supply, you increase your rates. If clients continue to show up looking for more services, you raise them again. 

This isn’t a criticism of the big national firms. I spent almost seven years working for one of them. Most of the lawyers you will meet at Caravel started their careers at a big national firm, including our founders. I have a ton of respect for these firms and the lawyers who are part of them. They are often excellent at what they do. 

It might surprise you to know that many Partners are uncomfortable with their rates. It can be difficult to tell someone that you charge over $1,000 per hour, and it certainly puts a lot of pressure on you to be worth it. 


Rates are part of a law firm’s brand 

High rates are not just about helping lawyers make as much money as possible. They are a key part of a firm’s brand. It’s how these firms signal quality. How do you know Firm X is a top-quality law firm? If it can charge rates that are among the highest in the country, it must be a top firm. They couldn’t charge that much if they weren’t that good. 

They’re trying to convince prospective clients they’re offering a premium service by charging a premium price. So when you see big law firms charging rates that seem shockingly high, much like the strategy used by Red Bull, you’re effectively seeing a marketing effort in action. 

Ultimately the work does have to support the branding. Law firms exist in a market, and firms set their rates based on what clients will pay and what the market can bear. If clients have a negative experience, eventually the firm’s brand will suffer. 

But is there a direct correlation between a law firm’s rates and the quality of the legal work and the service they provide?  


The valuation of legal skill 

It’s hard to judge the quality of the legal work you receive. Is the contract drafted well? You might think so, but you really find out when there’s a dispute. Is the employment offer drafted well? You’ll may only find out when you terminate that employee. 

There’s no shortage of articles highlighting situations where a missing comma in a contract cost a company millions of dollars. Those companies probably all thought their contracts were well-drafted. 

And if you’re not in-house counsel, and don’t have any legal experience, you’ll find it extremely hard to tell whether the work is done well. The reality is that most business owners are not able to determine the quality of the legal service they receive. They know whether they receive responsive service and a thoughtful approach to the matter, but the legal documents themselves are often hard to follow. 

So, do clients actually know whether they’re getting high-quality legal expertise by paying high legal fees? Or is the firm’s brand doing a lot of heavy lifting here? 


What do lower rates signal? 

Law firms that offer more competitive rates often provide comparable service and legal expertise without the premium price tag.  

This often prompts the question, “How are your rates so much lower?” 

If you haven’t required help from a lawyer before, you might be surprised at how expensive it is to hire even a solo practitioner or a firm like ours with a lean business model and a focus on value. Legal services are not cheap. But we get asked that question a lot about Caravel Law by people who have worked with other firms.  

There are many firms that have lower overhead by design in order to provide high quality legal services at a lower cost. They work in a lean and agile way so they can offer their clients competitive pricing without sacrificing the quality of their service. But if you’ve used a big national firm before, the difference in rates might raise concerns about quality. You may look at these legal teams and wonder how they can offer services at rates that are so much lower.  

The reality is that our rates are part of our branding as well. We want our rates to signal an innovative approach, effective use of technology and a different type of relationship with our clients. We’ve tried to cut out everything that doesn’t add value, like the big fancy offices, marketing budgets and perks, but we still want to impress our clients. Business owners often think a high-price tag means a high level of service from a law firm and when your rates are lower, you have to really explain the differences or risk lower expectations. 

We don’t want lower expectations from our clients. No firm should. 


Finding the right fit 

So if price alone doesn’t tell you whether a law firm is offering first-rate legal services, what else can business owners look for to help them identify the high-quality firms they should be working with?  

Review the background and experience of the lawyers that you would be working with. Do they have clients in your industry? Have they gained the experience that you’re looking for?  

See what other clients say about their experiences with the firm. Check out online reviews, case studies, testimonials on the firm’s website, their NPS score, and whether the legal-related content that they are presenting to the market is relevant to your business. Try to review all of the background information and test for fit before you know anything about rates. 

If the lower rates still make you nervous, find an appropriate piece of work and get first-hand experience working with an innovative firm with a different approach. Keeping your standards as high as you would for a big national traditional firm, were you happy with the work and the service provided? 

If so, you have a valuable new option for your business.  


If you’re looking for qualified, experienced legal support at a competitive price, Caravel Law is here to help. We’re an alternative innovative law firm with over 80 qualified and experienced lawyers. Get in touch with our team today to find out more. 

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