Lawyer Hourly Rate & Fees by State
Lawyer Hourly Rate & Fees by State
Billing is a common source of confusion among lawyers. The more mysterious aspects involve using technology, tracking your time efficiently, and handling trust accounts. But those details, while important, are secondary to the primary billing question: How should you structure your attorney fees?
While you can use various fee arrangements in your law firm, any fee structure should be underpinned by an hourly rate. Say you intend to charge flat fees only. You can't define your flat fee schedule without first knowing your hourly rate plus the number of hours required to handle different case types. The same is true for retainer-based fees, which are deposits on future hourly work.
For that reason, setting an appropriate hourly rate for your legal services is a top priority for your law firm. Fortunately, you're in the right place to get started. Read on to review the components of a lawyer hourly rate, average lawyer hourly rate by state, and when and how to use other fee structures in your law firm.
Do Lawyers Bill at an Hourly Rate?
Yes, many lawyers bill clients at an hourly rate. This isn't the only billing structure lawyers use, but it is among the most common, according to The National Law Review.
Hourly billing ties your income directly to the time you spend on a case. If you can manage the process of hourly billing, this is an equitable fee structure. After all, time is your most valuable asset.
Billing Increments and Timekeeping
The typical legal invoicing practice is to bill in increments of one-tenth of an hour. Many attorneys use a billable hours chart to support that effort. The chart converts minutes into an appropriate billing segment. With a quick glance, for example, you can determine that a six-minute phone call equates to 0.1 billable hours.
To bill for that phone call and everything else you do, you must diligently log task start and end times. Additionally, you must record detailed, clear task descriptions. Since these descriptions become the content for your legal invoices, they must be client-friendly.
Ideally, you'd use law firm billing software that automatically creates invoices from your time records. That way, you'd only write the descriptions once as you complete tasks—rather than re-entering them in an invoice later.
You might wonder if it makes more sense to skip all that record-keeping and charge flat fees instead. Unfortunately, the answer is no. Accurate time records are essential to running your law firm, no matter how you charge:
- Time records document how you spend your time and reveal areas of inefficiency.
- Time records validate or invalidate any flat fees you're charging. As an example, say you've set a flat fee assuming 100 hours of work for a certain type of case. If time records show you're spending 125 hours on average, you’ll need to adjust your fee schedule to remain profitable.
- Perhaps most importantly, time records provide valuable talking points for client calls.
A reliable system for timekeeping plus a targeted hourly bill rate are foundational pieces of your law firm's billing process. Without these two pieces in place, you'll struggle to manage and grow your firm efficiently.
What is Built into the Hourly Rate of a Lawyer?
As for setting your hourly bill rate, there are a few factors that can guide you to the right number. They are your field of law, level of experience, and the average lawyer hourly rate in your region.
Field of Law
Not all lawyers bill top dollar. National law firm Schmidt and Clark reports that IP lawyers, medical lawyers, and real estate lawyers make more than family lawyers and civil rights lawyers.
As a general rule, highly specialized or technical lawyers can set higher hourly rates.
Experienced attorneys, too, command higher hourly rates. If you're just starting out on your own, you may have to price yourself competitively to lure in early clients. That should be a temporary strategy only. As you gain experience and a track record of success, you can raise your rate accordingly.
Where you live and work also influences what you can reasonably charge. Your location defines how much competition you face, the level of demand for your services, and the income levels of prospective clients.
If you live in a rural area, for example, there may be no other lawyers nearby. But then, the book of available clients who can afford your services may be smaller.
Average Lawyer Hourly Rate by State
Now we answer the core question: How much should a lawyer charge per hour? The table below documents the average lawyer hourly rate by state for 2022 and 2021, as reported by Statista.
|State||Average Hourly Rate 2022||Average Hourly Rate 2021|
|District of Columbia||$424||$411|
Table data source: Statista.
If you’re wondering how much to charge per hour, these average attorney fees by state offer a few different observations:
- Average lawyer hourly rates around the country range from $211 to $424.
- In 2022, the median hourly rate across all states was $261 and the average was $269.
- West Virginia had the cheapest average lawyer hourly rate in 2022.
- Washington, D.C., had the highest average hourly rate in 2022.
- Despite high inflation rates in 2022, average lawyer hourly rates were lower in some states versus the prior year. Lawyers in Arkansas, Idaho, Illinois, Michigan, Minnesota, Nebraska, and Nevada made less on average in 2022 versus 2021.
Keep these data points and conclusions in mind as you set your own hourly rate. If you live in West Virginia, for example, you can't command a Washington, D.C. rate. And while you should look at increasing your rates over time, you may not be able to raise your law firm pricing annually based on inflation.
What Additional Fees Do Lawyers Charge?
While hourly billing may be a core part of your business, you’ll likely use alternative fee arrangements as well. Three to consider are flat fees, contingency fees, and retainer fees.
A flat fee is appropriate for cases that are routine and repeatable, such as creating a will.
If you know how long the work takes and there are few complexities in play, set a standard fee for the service. Your clients will appreciate knowing their all-in cost upfront.
Contingency fees are set as a percentage of the amount awarded in a case. This structure is only appropriate for cases you can win. If your client receives no award or settlement, you won't get paid.
In contingency relationships, you might consider requiring the client to pay certain expenses regardless of the outcome. You'd outline those expenses in the fee agreements. You could also implement a sliding scale, with a fee percentage that varies based on how far the case went before settling.
Retainer fees rely on hourly bill rates, but the client pays upfront. The retainer is essentially a deposit the client pays on future services. As you work the case, you'd bill your time to the retainer and receive payment from that balance.
Your fee agreement will define how and when the client replenishes the retainer. Usually, you'd bill the client for a retainer top-up when the balance dips below a stated threshold.
While there are different fee structures available to you, effective law firm billing relies on an hourly rate and a reliable timekeeping system. Your hourly rate should be a function of your field, experience level, and the average attorney fees by state.
As for timekeeping, many lawyers use technology to streamline the process, such as LawPay Pro. A simple yet powerful law firm billing software, LawPay Pro supports time and expense tracking, billing and invoicing, trust account reconciliation, and client-friendly online payment options. Linking time tracking with invoicing and payments makes it easy for law firms to create accurate and detailed invoices, and accept payments—all while maintaining compliance with state bar guidelines.
To learn more about how LawPay Pro can help you manage and grow your law firm through accurate timekeeping and invoicing, schedule a demo today.