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Would you buy a refrigerator from a salesman who told you, “We don’t have a fixed price, and you won’t know what the price is until it’s installed in your house, and you’re legally liable to pay for it.”
Firms that serve corporate clients are no strangers to flat-fee and other non-hourly billing strategies. But more consumer and small business attorneys are finding that client-friendly pricing can be lawyer-friendly as well.
Would you buy a refrigerator from a salesman who told you, “We don’t have a fixed price, and you won’t know what the price is until it’s installed in your house, and you’re legally liable to pay for it.”
Perhaps that sounds ridiculous at first blush. But James Calloway, director of the Management Assistance Program at the Oklahoma Bar Association, draws an analogy to the way legal services are typically priced. “That [scenario] is what, to many clients, the hourly fee sounds like,” says Calloway, co-author of Winning Alternatives to the Billable Hour: Strategies that Work, published by the American Bar Association.
Among the shakeups in the legal market in the wake of the Great Recession has been a trend toward corporate in-house counsel demanding more value from their law firms. The Association of Corporate Counsel in 2012 even began a “Value Challenge” that tracks and rewards firms who deliver the biggest bang for the buck. Alongside that new push have been growing requests for alternatives to the hourly billing method that has been the gold standard in the legal world for decades.
And those requests are not limited to major corporations — small businesses and even consumers want to know upfront how much a given matter will cost them, at least within a modest dollar range. While flat fee and other non-hourly arrangements have been commonplace in cut-and-dried legal areas like tax and estate planning, they’re becoming more common across the practice areas of “Main Street” firms and attorneys.
Hourly pricing creates too much of a black box to suit most consumers …
“Law firms have to behave differently from the way they have traditionally,” Calloway says. “The business community, spurred by the events of 2008-2009, is trying to hold the line on outside counsel fees. For people who are living paycheck-to-paycheck – or middle-class people who need a lawyer even though it’s challenging to afford one – there’s an attraction to giving them a fixed fee they can count on.”
Hourly pricing creates too much of a black box to suit most consumers, says Patrick Lamb of Valorem Law Group in Chicago, the author of the recently releasedAlternative Fees for Litigators and their Clients (American Bar Association, 2014). “Even if you quote by the hour, how many hours it’s going to take is always an unknown,” he says. “If you buy a house, your broker’s fee is fixed, and in those cases, most of the time, the lawyer’s fee is fixed. But as you start getting into less pure commodity, form-filling-out kind of work, a lot fewer people are willing to provide fixed pricing.”
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