Modern legal time and billing software has made it easy for attorneys to implement a variety of alternative billing models for the benefit of their clients and their practices.
Is your law firm still using the billable hour? If so then you may be becoming an endangered species. The article “Alternative Billing Comes to Main Street” in the Illinois Bar Journal delves into the growing trend to use flat fee or other billing models and gives a number of tips to help you adopt non-hourly options in your legal time and billing software.
Know Your Costs
One of the reasons attorneys hesitate to abandon the billable hour is they are unsure how to determine a reasonable fee. If you have been using CosmoLex or some other legal billing software then you can look up similar matters and figure out an average cost for a typical case. Some cases will cost you more and other less than you are billing, so try to find a fee that will let you realize a decent profit overall.
Consider Contingencies
If a matter is a little more complicated than expected, then it’s best just to eat the extra costs and expect to make it up on other cases. However what do you do if you severely underestimate how much work is required? It’s best to have a contingency clause as part of your billing agreement. This gives you the option to bill hours and expenses beyond what is a reasonable amount of work, though if you are invoking the contingency clause often then you probably need to re-examine your pricing structure.
Change Orders
Lay out exactly what the flat fee entails. It’s not enough to say a given fee covers, for example, a bankruptcy filing. List exactly the work you will do. This protects you in case unanticipated complications arise, since you can explain the extra work will have to be billed in addition to the normal fee. Talk to the client first about the increased fee rather than saving it for a surprise in your final billing.
Use Technology
Attorneys have access to all kinds of law office software that simplifies everything from billing and docket control to conflict checking. When you can complete a task in less time, you widen your profit margin and improve your cash flow. Legal software also helps you analyze your workflow so you can see what kinds of matters are most profitable or what tasks need to be optimized for future cases.
The flat fee may be right for many clients, but consider implementing alternate billing models for at least some of your simpler matters. CosmoLex legal software makes it easy to implement multiple billing models in your practice.