The days of legal billing for every hour spent on the phone with a client, any time an email is written, or meet in the office is fading. Hourly billing was known for its objectivity and efficiency for both the client and law firm. Now value billing has started to take over, and although it is not as objective, it does put a price on a lawyer’s expertise as opposed to his/her time.
Hourly Billing Pros
- Both clients and lawyers are familiar to this system
- All risk is placed on the client. The lawyer will earn the money no matter the result of the case
- Tangible evidence of work completed make the system seem fair to both client and lawyer
- Rate schedules can be reviewed by client
Hourly Billing Cons
- Clients are refusing counseling, because of high rates
- Fee charged may not be worth the time, if that time was not used towards the case
- Efficiency is not encouraged. Hourly billing can be an incentive to ‘drag out’ time spent working which may not be productive to the client
- Hourly billing does not recognize extraordinary, priority, or emergency services
Value Billing
This type of billing is based on a lawyer’s abilities and expertise. The value of time spent is taken into considerations as opposed to the time itself. The client agrees to pay a flat fee over a period of time for a given project irrespective of hours.
Value Billing Pros
- Client and lawyers set expectations for the time used towards the case
- Client is billed only for the time their representative spends on the case and if that time is deemed productive
- The client’s subjective goals are defined and the value of reaching those goals is analyzed from their point of view
Value Billing Cons
- Law firm must set a flat fee based on each client
- Client may not understand the value of time spent on a certain project
- The lawyer may have to perform extra work that was not established before the flat fee and not be compensated
Despite the changes in billing, every law firm and attorney still needs an easy way to track time and send invoices to clients. Value billing still requires organization and documentation, and clients need to know what they are paying for.
If you’re looking for a simple solution to make legal billing easier and more streamlined for your firm, try our time tracking and billing software for free.
