What is Modest Means Law? To me it is a conscious decision to represent clients based on their needs and not their wealth. This can be an unusual decision for attorneys as it means giving up clients with deep pockets and seeking out clients who have legitimate issues that require representation but do not have the financial means to pay high billable hours.
It also means fighting the perception of “you get what you pay for” in the legal billable hour community.
The idea really gelled when I was introduced to the concept of “conscious capitalism” through the efforts of Ron Shaich and Panera Cares.
When I opened the firm I changed my focus from “how much I wanted to make” to focus instead on what I wanted my lifestyle to be. I am not a world traveler. You won’t be finding me on the beaches of Milan or the mountains of Italy sampling wines. I like to take vacations, but they are usually simple family affairs where we all pile in a van (all four generations) and head to the beach.
I wanted to be available for my kids games, school events, and other things that are valuable to me. This is the advice that I give to any small business person, including attorneys, starting out on their own:
Don’t start by naming a billable hour and shooting for an income level. Owning your own business is not about money, it is about lifestyle.
After Mr. Shaich and his efforts with Panera Cares, a second life altering article came my way.
The best salary for happiness, according to several studies, is $75,000 a year. Well, it was when the study was done in 2010. Several more studies have been done pegging the number a bit lower or highter, but that’s a good target number to work with if your focus is on lifestyle and not on accumulating points. So with these two things in mind (my lifestyle list and my happiness index) I felt I was ready to now calculate my billable hour using the basic formula:
Without getting into the complicated math of taxes, expenses, and what not (I did that for you) I came up with the average billable hour rate of $65/ hour.
That’s correct. If I bill and collect an average of $65/hour I will make my target income to maintain my lifestyle.
But that does not mean that every client who comes through my door pays $65/hour. I take in pro-bono clients, who pay nothing and low-bono clients who may pay $20/hour. But I have regular clients who pay $150 an hour and are do it gladly because they know that they are supplementing the payments of people who would go without legal representation otherwise.
I have a formula that allows me to calculate how many clients I can take on at what rate in order to keep the doors open and maintain those summer beach vacations with the family.
There is an extra-added bonus to taking on clients with a sliding scale. I don’t bother with calculating the length of a case, or how many hours it might bill since I have no shortage of clients when I bill below $100/hour. I don’t scramble for the next case, worry if there will be a client to fill my time, or have to pad out hours on a client with deeper pockets just in case I’m a little client dry for a period of time.
I also don’t worry about collecting money from clients. Since I have done a financial analysis I know what they can comfortably afford and it avoids those long, awkward silences when it comes time to pay the bill.