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Billing Alternatives For Solos

by Carolyn Elefant on November 2, 2007 · 0 comments

in Business Models, Setting and Collecting Fees

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Here’s an article from the ABA Journal entitled Billing by the Slice, which offers some alternative billing ideas by and for solos. With “billing by the slice,” lawyers bill for a case in stages – a practice used by Ted Waggoner of Rochester Indiana. From the article, Waggoner describes that:

he might tell a client that for a certain fee he will make calls and write letters to settle a case. If the case doesn’t settle, he will conduct discovery for another set fee. If the case still doesn’t settle after discovery and the client wishes to continue and file the lawsuit, a third specific fee will be due.

On the other hand, a new lawyer, Harsharn Makkar admits that she sometimes lowballs prices to bring cases in the door. But she derives value from these cases because “she learns about an area of law that will make her more efficient the next time she handles a similar issue.”

Both Waggoner and Makkar say that what’s most important to clients is knowing prices up front. When clients know how much it will cost, they’re less likely to argue about the bill down the line.
And clients are less likely to argue about their bill if it’s what they expected, he notes.

That’s what makes flat fees or alternative billing options preferable to open ended cases where lawyers charge by the hour. And solo and small firm lawyers aren’t the only ones who fall prey to clients who can’t pay. Consider this lawsuit filed by Fulbright & Jaworski against its high profile client, Bernard Kerik. The firm ran up a bill of over $200,000 – fees which Kerik claims were unexpected and which he’d have avoided with a lower cost attorney had he known.

Many litigation attorneys complain that they can’t set budgets for their cases because they have no control over opposing counsel. While I agree that it’s difficult to account for every variable in litigation, that doens’t mean that lawyers can’t at least attempt to ballpark an estimate – or give a “not to exceed cap” (subject to change for legitimately unanticipated events). But setting those kinds of budgets takes work. For a look at some of the factors that go into setting a fee estimate in a litigation case, consider this resource, John Tothman’s Devils Advocate Managing Legal Fees Guide. Tothman’s resources are not frequently cited by most value billing proponents, perhaps because he advocates for clients seeking to trim bloated legal bills rather than lawyers looking for creative ways to increase revenues. But Tothman does endorse alternative billing strategies and he’s clear that cheaper is not always better. Also, for additional intelligent discussion of alternative billing, check out Allison Shields’ collection of posts at her Legal Ease Blog.

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