Mar 29, 2012
Are You On Your Client’s Side?
In case you haven’t noticed, I have beef with the whole billable hours thing. I have heard all the arguments in favor of billing by the hour, and I have heard all the arguments against it, and at the end of the day it comes down to this: whose side are we on anyway? Under the Rules of Professional Conduct, we are to zealously represent our clients’ best interests at all times. How can racking up higher and higher fees, with no end in sight, be in the clients’ best interests?
At Big Law, my value was calculated in six-minute increments. The more .1′s and .2′s I put on my time sheet, racking up higher bills for my clients, the more valuable I was to the firm. Well duh! You HAVE to be a profit center in order to be a valuable employee to any business, much less a law firm. And if the law firm’s model is billing by the hour, you are only as valuable as the number of hours you bill. There was not much incentive to be efficient, to do excellent work or provide value for each second that you billed. At the end of the day, no matter how good a lawyer I was, if my production of billable hours was not so good, I was considered not as good a lawyer as a coworker who did sloppy work but racked up the billable hours. That’s the game.
I began to resent my time sheet and what it represented. My clients were almost uniformly unhappy with their bills. Some accused the firm of gouging them. Others fired the firm and went elsewhere. Some stayed with us, but were very guarded about how we billed our time. I watched others go out of business as they struggled to keep up with the mounting legal costs.
That’s how I learned that the billable hour was the enemy of the lawyer who truly has the client’s – rather than her own – best interests at heart. It was not in my clients’ best interests to agree on an hourly fee with no idea of how much time it would take to do the work.Hourly billing is, by its very nature, open-ended and skewed in favor of the lawyer. The client never knows exactly what the bill will be until he gets it at the end of the month. The lawyer has a strong incentive to bill more hours to the client, not to get the work done quickly.
All of which is why I ditched the billable hour when I went out on my own. Never mind the freedom from having to track every second of my day. The true beauty of my billing method is that it is always an arms’ length negotiation. I tell the client what I am willing to do for what fee, and if the client disagrees with the fee they have a choice: go elsewhere or negotiate a lower fee for less service. This negotiation is up front, before services begin.
Once the client and I have reached an agreement, our interests are aligned. I collect from the client up front and put the money in my IOLTA trust account. It stays there until I have completed the work, at which point the fee is earned. So the client has some skin in the game because they have paid in advance. I am not paid anything until the work is complete, so I’ve got some skin in the game as well. It is in both the client’s and my own best interests for me to do the work well and as quickly as possible. I find that this method works well for everything from forming a new corporation to drafting a will to litigation.
Yes, I said litigation. While I do not consider myself a litigator, I do sometimes go to court on behalf of my clients. When I do, I do not bill by the hour. Instead, I negotiate a fee for each phase of representation and we go from there.
When I was in a partnership (between Big Law and Solo), my partner was a litigator who insisted that flat fee representation would not work for litigation because, “You have no idea how much time it will take or how much work will be involved.” I don’t dispute that you do not know how much time will be involved with a litigation. I do dispute that you don’t know how much work will be involved. I charge a fee to send a demand letter. Another to file a complaint and serve summonses. Another to file a motion. Another to appear in court or attend a deposition or mediation. I break it down sufficiently so that my client isn’t blind-sided by my bill. They know in advance what the fees and costs will be to handle each phase of representation when we get there. And if something truly unexpected comes along, we will negotiate a fee for handling that as well.
The funny thing is, I’m not cheap. I probably charge something comparable to most of the Big Law firms for similar services. But that’s not the point. The point is that my clients know what the fee will be up front, before the work gets started. My interests are aligned with my client’s interests. And I am free to zealously represent them without my invoice getting in the way.
Have you given up the billable hour? Do you do unbundled representation? How have you handled litigation which lawyers say ‘can’t be unbundled’?
All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.