Alternative billing may be lawyers’ answer

Listen to this article

Boston — Experts have been predicting the imminent demise of the billable hour for years. But the current economy may give many lawyers the final push towards trying some alternative billing methods. Chris Marston, the CEO of Exemplar Law Partners in Boston, operates strictly on a “value-based” billing system.

“We sit down and have a conversation with clients about exactly what they value, their will and ability to pay their bill, their desired outcome and the desired process to achieve that outcome,” he told listeners at a recent webinar hosted by the American Law Institute-American Bar Association.

While this requires more time and effort on the front end, Marsden believes it cuts down on collection problems and the likelihood that clients will be unhappy about their bill.

Mark A. Robertson, a partner at Robertson & Williams in Oklahoma City, Okla. and the co-author of “Winning Alternatives to the Billable Hour,” uses alternative billing methods for a substantial portion of his work. He suggested some common alternatives to the billable hour, including:

Contingency fees: Commonly used by personal injury plaintiffs’ attorneys;
Percentage fees: These can be based on a percentage of the value of an estate or a bond offering, for example;

Fixed or flat fees: A set fee for defined services; for example, a will package for $500;
Availability retainers: These allow clients to pay a set amount per month, regardless of whether they send zero or 15 matters to the lawyer;

Task-based fees: These are similar to fixed rates, but are based on pieces of the entire matter, such as specific litigation activities like depositions; and

Retrospective evaluation: This permits the client and attorney to sit down after the fact and decide on a fair price. Robertson said this method is used infrequently and can cause problems when a client is unhappy with the results.

Lawyers can also use hybrids of these billing ideas, Robertson suggested, such as a fixed fee for document completion but an hourly rate for meetings, phone calls or e-mails necessary to get the work done. This method can be useful for a client who likes to ask lots of questions and maintain constant contact, he noted.

Attorneys interested in trying alternatives to the billable hour should check with their local bar associations to make sure their state ethic rules allow it.

“Alternative billing may not work in all circumstances,” Robertson noted.