Alternative Billing -- Win Win Strategiesby: Dan HarrisBetter Legal Billing:
Time Slips for the FutureOptions Abound, But It's Often Up to Clients to Suggest
Them In the old days of legal billing, lawyer's invoices usually a single page
of elegant letterheadcontained only the phrase, "legal services rendered," and a
hefty dollar amount. No time breakdowns, no list of activities performed or
equipment and supplies usedjust a final, usually shocking, charge. But client
demands and the evolution of sophisticated billing software have led to more
detailed invoices today. Itemized statements have triggered discussion among
businesses about whether hourly billing is the best way to be charged for legal
services. As the legal profession becomes more competitive and dependent on high
quality customer service, lawyers need to embrace alternate billing methods.
Fixed or flat fees, contingency fees, non-refundable retainers with discounted
hourly fees, blended hourly fees and variations on those themes are becoming
increasingly common. But many law firms have been slow to join this trend
lawyers still perform approximately 95 percent of their corporate legal work on
an hourly basis. What does that mean for your small business? If your company is
currently working with a law firm or looking for legal counsel, try requesting
alternate billing options. While many law firms rarely initiate different
options, they'll negotiate when brought to the table. If you want something
better than the old "bill by the hour" deal, try presenting one of these billing
structures: Project billing for routine issuesQuestions To Ask Your Legal
CounselIs the attorney experienced in business law or just practicing it between
drafting wills and selling homes? Does the attorney give advice in plain
language or does he use a lot of jargon? Is there good "chemistry" between you
and the attorney? Are the attorney's ethics and goals clear? What's the
attorney's track record with other businesses similar to yours? If your legal
needs include large but repetitive tasks, consider a flat-fee approach, also
known as project billing. If you need legal assistance on a large research
project involving several repetitive tasks with a fair amount of predictability
for cost estimation and time duration, request a dollar cap for predetermined
services. Be sure to compare estimated costs at the equivalent hourly ratea
projected cap that far exceeds any likely bill is really no cap at all. Once you
get a project billing estimate, don't hesitate to shop around. Making an
informed decision shopping around, comparing prices and services with other law
firms is good business sense, especially if you intend to hire a firm for a
single project. If you anticipate establishing a long-term relationship, mention
this as you're negotiating a project amount a firm may provide a better deal if
it expects future work from your company.Results-oriented optionsForget the
image of personal injury attorneys taking a third of any verdict or settlement.
Consider instead contingency fees fees based on the outcome of the case and the
performance of your counsel. Creative use of contingency fees can create
efficiencies in even the most high-level corporate settings. If you retain a
lawyer to help your company avoid litigation, couple a reduced hourly rate with
a bonus for successfully lowering your litigation outlays. You also can
establish an incentive based on a percentage of money won or saved in trial. If
you're a defendant in a case where the plaintiff has a strong shot at a $1
million settlement, negotiate a flat fee if the case goes to trial, plus a bonus
if the plaintiff ends up getting less than $1 million. If you're a plaintiff and
estimate your case is worth between $1 and $2 million, you might negotiate
services for a flat fee plus a percentage of any settlement over $1 million.
Contingency fees turn the matter into a shared risk or shared incentive, making
the law firm your business partner, not just representation. Contingency fees
can work well with both flat fee and reduced hourly fee arrangements. Because a
number of variations on the "pay-according-to-success" theme exist, you should
ask firms for the options they're willing to discuss. Multi-layered tasks If
you're shopping for a firm for substantial legal work involving a number of
legal specialties, consider using blended hourly fees. Rather than each attorney
billing at the usual hourly rate, the firm calculates in advance an "average"
rate based on the anticipated time each attorney spends on the matter. The value
of this arrangement is twofoldit helps define responsibility in a project and it
provides a fair price schedule for the client, who avoids paying a senior
partner's hourly rate for research that should be conducted by a junior
associateLegal "Insurance" Firms without in-house counsel that frequently hire
legal services might consider contracting with a firm. In this legal billing
option, firms and clients agree to a specific charge per month in exchange for a
predetermined set of legal services. The contract fee permits the client to pick
up the phone and talk to the attorney without needing to eye the clock. This
approach works like a legal insurance policy. It encourages companies to contact
their counsel on non-litigation, non-crisis matters, and to save money in the
long run by engaging in more preventive legal action. Just as in business, the
impetus for change comes from consumer demand. The sooner businesses take the
lead in securing more effectively tailored billing methods from their legal
counsel, the sooner they'll get better, more cost-effective legal
assistance.About The AuthorDan Harris is an attorney with the international law
firm of Harris & Moure, pllc. Website:
http://www.harrismoure.comfirm@harrismoure.com
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