Like a horror movie villain, no matter how many articles proclaim its death, the billable hour continues to lumber on and remains entrenched as the de facto billing standard in the legal industry.
However, a growing number of new model law firms, like the firm run by yesterday’s Clio Webinar guest speaker – Lee Rosen of Rosen Law Firm, are finding great success in exclusively offering their legal clients flat fees. These are law firms that traditionally practice hourly billing, like tax attorneys and family law litigators.
Are flat fees right for you and your client base? Here are some reasons you should consider making the shift.
Fixed fees promote efficiency
Efficiency is something we all strive for—unless you bill by the hour. When you’re earning a premium for each hour you spend on a task, why would you be compelled to work faster? Billing by the hour rewards the inefficient by inflating earnings for those who take the longest to get things done.
Flat fees reward your investment in technology
Lawyers are constantly investing in technology that makes them more productive. Document automation, practice management software, and E-discovery are all examples of this. But investing in technology that makes you more productive can have a negative impact on your bottom line when you bill by the hour. Sure, you can use that extra time to take on additional matters, but you can still only bill for 24 hours in a day (unless you’re this guy).
Flat fees reduce administrative work
Call it the ‘bureaucracy of billing’: billing by the hour necessitates an army of bookkeepers, and the effort required to meticulously pore over Work In Progress reports and invest in contemporaneous time tracking. Even though technology exists to make this easier, why would you want to create additional work for yourself? Flat fee billing can ease the strain on your firm with simple, up-front payments from your clients.
Flat fees are a competitive advantage
In a world where everyone is billing hourly, distinguishing yourself from your competitors by offering the peace of mind and cost assurance of flat fees can be a huge benefit to your firm—so much so that clients are even willing to pay a premium on top of what they’d normally pay hourly.
Flat fees establish attorney-client trust
If clients know that they’re paying for every phone call, email, or meeting, or minute of your time, they’re likely to be a lot more apprehensive about contacting you to share information. If there’s no surcharge for a client reaching out to you and giving you what you need to do your job, it makes them more likely to engage—and makes you a better lawyer.
The right billing solution depends on your practice and the needs (demands) of your clients, but don’t be afraid to drive a wooden stake through the heart of the billable hour or chase that monster off the cliff. There are alternatives and being flexible to the ones that are right for your practice will make you a better lawyer and keep your clients very satisfied.
Want to learn more about how flat fees can transform your firm? Check out our free webinar as you commute today, with Clio’s lawyer-in-residence Joshua Lenon and Lee Rosen, ‘Flat Fees for Fun and Profit‘.
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Categorized in: Business
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