I have long advocated that the billable hour is not only bad for clients, but bad for lawyers too. From a client’s perspective it is like government work, that is, cost-plus, because the more the lawyer works (efficiently or otherwise) the more the lawyer makes. From the attorney’s standpoint once he or she has created a contract and billed the client, they can’t bill the next client more than a fraction of a hour for the same or very similar contract even though both clients receive the same value. Nuts ain’t it.
Richard Hall on his Managing the Business of Law blog has a post with another example of what’s wrong with the billable hour. And check out the Attorney Work Life Balance Calculator which comes our way from JD Bliss to determine how many nights and weekends you need to work to meet your billable hour goals.
Get a marketing advantage over your competitors by pricing your legal work based on value rendered. There is risk involved, but if you have a handle on your costs, I believe you will increase your income over the long term and decrease the amount time watching the clock.

Thanks to The Greatest American Lawyer for pointing out Lawyers Weekly USA’s article by Sylvia Hsieh on alternatives to hourly billing by small firms.
In an earlier post I pointed out how I believe small firms can get an advantage on larger firms by proposing alternative fee arrangements. Sylvia points out that “[S]mall firms have an easier time switching to new billing methods” due in part to larger firms’ high cash flow needs. She also quotes Jim Calloway whose blog was the basis of my earlier missive.
Sylvia mentions four fee arrangements:
*Flat Fee (the most common alternative) – but make sure you know what your costs will be to deliver your services;
*Variations on Contingency Fee – not restricted to personal injury cases,
*Blended Fees – such as flat fees for certain deliverables, and a success fee, and
*Budgeted Fees – commonly used in litigation, and often with conditions if budget is exceeded.
A number of variations in her four examples makes this piece all the more worth a look.

In all my years in the legal marketing business, one of the most important lessons learned is that clients do not like surprises. Do any of us? Many years ago as an in-house marketing director, I produced a video in which clients stated their expectations of their outside law firms. I shared this with the firm’s lawyers. Many issues were raised, but clearly one of the most important to clients is not being surprised. Ed Poll, who provides coaching services for lawyers, recently commented on how “Bankers abhor surprises.” It isn’t any different for law firm clients. So, lawyers beware!

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.