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Legal Marketing Blog A blog dedicated to lawyer marketing in any size law firm

Alternative Fees vs. Billable Hour

Posted in Legal Fees

Small firms can gain an advantage by looking seriously at alternatives to billing by the hour. Although large firms bill mainly based on hourly rates, they do use alternative billing such as fixed fees, discounted fees, premium based on results, etc. But they do not do much of it. Consultant Jim Calloway co-authored an article for “Law Practice Today,” a publication of ABA’s Law Practice Management Section, entitled “Alternative Billing for the ‘Main Street Lawyer.’” He points out that both large and small firms serve, as he puts it, businesses that have “more in common with a consumer” when it comes to legal fees. Attorneys in small firms are closer to the road as it were, and accordingly have more flexibility in setting fees than do many attorneys in large firms. A lack of bureaucracy comes to mind as one reason.
Just like you want an estimate from your mechanic for car repairs, smaller businesses and individual clients are demanding to know what it is going to cost them for your services. They at least want a cost range, so they are not overwhelmed when the bill comes. No one likes surprises. This is where a small firm can exercise an advantage.
You can do so by determining how much time and what expenses were associated with like matters you have handled over the past few years. Recognizing that each case or matter is different, you can come up an average so you can at least determine a range of costs, so the client has some idea of what the legal fees will be. By doing so, the client is going to feel more comfortable up front, and a happy client is going to tell friends.