See this valuable advice from Tom Kane at his Legal Marketing Blog: “Don’t Compete on Price, It’s a Loser“. My two cents: that goes double if you are a boutique, or cluster of boutiques, competing for high-end clients with large law firms. In that case, you might even want to charge a bit more. And if you leave a large firm, be sure to keep your rates at least as high as they were.
Don’t bottom-feed. Compete on service.