2007 Resolution: Consider Billing Alternatives

By at 28 December, 2006, 10:58 am

I think most attorneys would love to be able to do away with the billable hour and achieve a method of billing that is both fair to the client and provides a living for the attorney which reflects the skill, knowledge and dedication the attorney puts forward into representing a client.  I think this is an appropriate issue to be thinking about is we move forward into 2007.

Over the years there have been various ideas discussed including flat fee billing, value billing as well as unbundling or à la carte services (where the client only purchases the services they specifically desire). There are numerous books published by the American Bar Association including Winning Alternatives to the Billable Hour: Strategies That Work by James A. Calloway and Mark A. Robertson and BILLING INNOVATIONS by Richard C. Reid on alternatives to traditional hourly billing.

A recent post on the American Bar Association Solesez  listserv discussed the idea of simply charging clients a set amount each year for the representation.  In many ways, this would be similar to legal service plans offered to employers and employees by companies such as ARAG Legal Solutions are those listed on the American Prepaid Legal Services Institute website  where they can obtain legal services for a set monthly fee.

I did some of this in my own practice for clients with corporations and limited liability companies I formed for them: at the beginning of each year I charged a set dollar amount to serve as registered agent, prepare the annual reports and any minutes or other documentation needed to accurately reflect the year's events in the books and records of the company.  However, the discussion on Solosez goes beyond this and looks at modeling your entire billing practice on this annual fee model or a modification of this model by providing a set fee for most services and anything in excess of those services being on an hourly basis.  The Solesez discussion also included reference to the business model undertaken by Virginia attorney William Ellyson.

The October 2005 edition of the Virginia Lawyer magazine contained an article on attorney Ellyson and his practice and billing model. It's clear from this article that attorney Ellyson is very happy with his decision and that his practice and billing model appears to be working for him.  He has used this opportunity to limit his practice to representing only small businesses, but perhaps this business and billing model could be used in other practice areas as well.

Attorney Ellyson lays out his billing practices and charges on his website: at a minimum I think this information is worth reviewing to give one pause to consider the possibilities of changing the way we interact with our clients and earn our livings. As lawyers throughout the country face increased competition from document preparation companies, online legal service providers and other entities, we need to take a hard look at our business models and how to deliver quality legal services to clients at prices they can afford and which allow an attorney to operate a law office or firm and make a living for him or herself as well as their staff.

So make a resolution for 2007: resolve to review your billing practices and consider whether or not both you and your clients are best served by your existing methods or if a change would be beneficial.






Categories : Practice Management

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