Introduction
Welcome to the latest edition of Legal Matters. I wish you a prosperous and enjoyable season. What do the $1,000 law firm rates in the Wall Street Journal have to do with malpractice claims? Read on... 

Rates
The recent Wall Street Journal article about the $1,000 per hour rate again brought legal rates into the mainstream business press.

There are many perspectives on this story, but here are my two takes for managing partners:

Rates are just numbers. Long term, corporations and individuals will pay what they think outside counsel is worth. The value clients receive from their legal advisor in exchange for the legal fee. They don't really care what your overhead and costs total, though that is frequently the reasons given to clients for new rates. They only care if your team is worth more than the alternatives which are: handle it themselves for significantly less (if they can) or get the same value from another firm for less money (which hopefully they can't).

Marketing Opportunity
As discussed here, many general counsels are concerned that some large firm rates are exceeding their relative value. Small and mid-sized firms should take note of this opportunity. There are obviously some situations that people will gladly pay $1,000 per hour, but there is far more legal work where buyers are asking themselves if high rates are really worth the value received.

Expectations
Fees are related to value and expectations and so are malpractice claims. Almost every malpractice claim is about the client expecting something different from what happened -- different legal results (they lost), different money (settlement was less than they dreamed about), or sometimes just different time frames for matters to wrap up. When the gap between expectation and reality gets too large, clients sue their lawyers.

You can't have perfect clients but constant effective communications with timelines will go a long way in minimizing malpractice claims. 
 
We Can Help
If you would like to discuss this subject or other insurance matters further please contact:
Uri Gutfreund, RPLU at 201-837-1100 or uri.gutfreund@SingerNelson.com

This material is provided for informational purposes only. Before taking any action that could have legal or other important consequences, speak with a qualified professional who can provide guidance that considers your own unique circumstances.