Would you go on a cruise without knowing the final cost? Would you board the boat knowing that your bill would be based upon the number of hours that people worked on the ship or waited on you? Would you want to be sent a bill at the end of the cruise based upon the number of times you talked to crew members and the number of hours they spent cleaning your room. No!
Would you rather be quoted a single fee for the cruise, determine if you wanted to spend that much, pay your fee up front and then receive unlimited service at no extra charge? I think so.
And that’s the way it is for most things and services we buy. But not for most lawyers. The typical lawyer quotes you hourly rates for services and then embarks on your case and sends you bills each month based solely on the time people spend on the project. When the bill arrives, it is a surprise and you will not know the total cost of your project until the end. Even the lawyer does not know how much his bill will be before he totals his time.
A recent survey by the preeminent law practice management firm of Aultman Weil reveals that between 71 and 87% of firms believe non-hourly billing for lawyers will be adopted as the standard for most firms in the future. The American Bar Association Task Force on Alternative Billing called for change in hourly billing in 1989, pointing out that hourly billing provides a disincentive for efficiency.
Clients, particularly corporations, are going to be demanding certainty in their legal costs and efficiency from their lawyers, not time spent. The Association of Corporate Counsel has adopted a platform advocating the dumping of the billable hour and the adoption of value based pricing. Both lawyers and clients will be better off with this change. Visit the Verasage Institute on Value Pricing for more information.
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