By Nerino Petro at 29 March, 2007, 12:26 pm
In my December 28, 2006 post titled 2007 Resolution: Consider Billing Alternatives, I wrote about billing alternatives. Law.com Small Firm Business has an interesting article today titled . This article talks about the benefits that many firms have experienced in moving to a fixed fee model for billing. According to the article:
In the past year, the Ambrose Law Group of Portland, Ore., switched from the billable hour to a flat-fee structure.
The results have been dramatic, with the five-attorney firm reporting a 90 percent increase in profits.
While many firms may not experience this same increase in profits, the article does point out many of the benefits that can result from adopting this billing model in addition to increased profits: improved client relations, decreased accounts receivables and less stress for a firm’s attorneys. Quoting Attorney Mark Chinn, the article goes on:
Mark Chinn, of Chinn & Associates, a five-member family law practice in Jackson, Miss., said his firm also customizes the price for each individual client.
"And when the client knows how much it is going to cost, it gives them a better understanding if they want to go ahead and take action," said Chinn, who added that since he switched to flat-fee rates in July 2005, he has zero accounts receivable.
"If you lose a client because of the up-front price, you lost a client that would have ultimately not paid you anyway," he said.
Chinn said, in addition to increasing revenues, billing by flat fees has also improved the atmosphere of his firm.
While this model may not work for every attorney, our profession needs to look at changing its traditional models for doing business to adapt to modern business realities. As a profession, we can refuse to change while other professions and our clients adopt new ways of doing business and billing, continuing to lose ground to non-lawyer providers; or we can embrace these types of changes and focus on delivering value and service to our clients.