Are You Shackled to the Hourly Billing Model? Escape Today!

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Kevin Hochin at www.lawyerist.com wrote an interesting article that should be read by every lawyer who wants to be set free from the tyranny of hourly billing.

Say what?

Isn’t hourly billing the best deal going?  Just calculate the hours, multiply the rate, then send the bill.  Right?

Perhaps you’ve not yet realized the major pitfalls of hourly billing just yet.

Perhaps you’ve not yet realized that with hourly billing the only way for you to make more money is to work more hours.

Perhaps you’ve not yet realized the value in a client who doesn’t cringe when they get a letter from you and ask themselves, “Wonder what that cost me?”

I long ago discover all three of the issues noted above (and others) so I’m moving toward a non-hourly arrangement with clients when reasonable.

Obviously, it’s hard to do significant litigation on a non-hourly basis.  However, I’ve heard of lawyers who use flat fee billing for specific tasks such as Court Appearance on Motion, Preparing Interrogatories, etc.    That can work on a practice that is fairly systemizable such as divorces or estates.

Non-hourly billing works in many areas, limited only by (1) your desire to be unshackled from the hourly billing model we all learned in law school and (2) your creativity.

Here are a few ideas:

  1. Corporation Support Services:  $150.00 per month on a 12 month contract.  Do all minutes, meeting notices, annual reports and telephone consultation.  No litigation included.  Perhaps include 48 hr response email consults.  This would work pretty well for your typical small business.
  2. Corporate Formation.  Do a fixed fee, plus annual support.  Could even couple with the Corporate Support Services package above with a discount on this package.
  3. Estate Service Package.  Prepare the wills for husband and wife, with a 12th month review in the package.  This gives you the opportunity to serve your client deeper.
  4. Homeowner Concern Package.  For $50.00 per month, you look at any contracts that they are considering entering into.  For example if they are going to remodel the house or take in a renter.  Perhaps they are going to rent the house and want you on board to send demand letters to tenants (but not committed to filing suit).

Of course these are all just suggestions.  The numbers may be too high or too low for your location.  I throw them out just to give you something to think about.

You don’t have to jump off the cliff and go 100% non-hourly billing.  Look at a specific practice area.  The keys are (1) reasonable predictability of your costs; (2) ability to give and present value to the client; and (3) willingness to bear a portion of the risk that your clients are bearing by hiring you.

Please let me know what you think in the comments below.

Have you got any ideas on areas of the business that lend itself to non-hourly billing?

Are you implementing non-hourly billing in specific areas?  How’s it working?

I’d love to hear from you.

Photo Credit:  GenBug

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