Both Ed Poll at LawBiz Blog and Jonathan Stein at The Practice have had good recent posts (respectively, here and here) on this subject. Unless it’s a trade-off for volume work for a client you’ve worked with before, I am a believer in the idea you should not reduce your fees. Compete on service–not price. While I’ve posted on this before, I like Ed’s and Jonathan’s slightly different takes (for different types of clients) on this topic better than anything I’ve said on it previously.
The primary reason, for me: if clients come to you for price, they will leave you for price. And if you think about it, would-be clients who negotiate or haggle about price are not likely to know the difference between quality lawyering and “just going through the motions” anyway. They are out there in droves–well-meaning but unsophisticated users of legal services, both businesses and individuals, who think all lawyers are the same and doing the same fungible cookie-cutter stuff every day. These clients don’t appreciate any lawyer; they don’t and won’t ever get it. If one becomes your client, very quickly you–as a popular Washington DC disc jockey used to say–will “be hating life”.