Fall 2008 - #13. Implementing Alternative Billing Methods.

Author:by Arthur C. Greene, Esq.

Vermont Bar Journal


Fall 2008 - #13.

Implementing Alternative Billing Methods

The Vermont Bar Journal #175, Volume 34, No. 3 FALL 2008

Implementing Alternative Billing Methodsby Arthur C. Greene, Esq.Hourly billing is disliked by lawyers as well as many of the clients they serve. Simply stated, hourly billing provides all the wrong incentives. It puts far too much focus on the process and the mechanics of practicing law, and not enough attention on the value of the service delivered or the result achieved.

A fair fee from the client's perspective is often described as both predictable and providing value commensurate with the dollars spent. In many situations, hourly billing does neither. And from the lawyer's perspective, a fair fee is one that rewards the lawyer's efficiency and expertise, and provides a return on the lawyer's investment in technology and the related systems. Hourly billing provides none of these benefits.

Even though lawyers have recognized the harm caused by hourly billing to both their profession and their client relationships, implementing change has been difficult. Alternative billing methods is one of the "hottest" issues facing the profession and seminars on the subject draw huge audiences. Yet, most lawyers are still in search of the formula for change.

Change comes hard to most lawyers. This issue is no exception. Basically, there are three significant barriers to the change to alternative billing methods: the lawyers, the clients, and the law firm administrators. Let's take a look at each in turn.

The Lawyers

Many lawyers want to get away from hourly billing. A few have been successful. Most do not know where to start. Those who make an attempt have difficulty as they lack the skill and aptitude for breaking away from the simple approach of counting hours and then doing the math.

Alternative billing methods require the lawyer to predict and analyze the effort that will be involved, to lay out the plan to be followed, and to factor in the likely outcome. These alternative methods favor the lawyer with good management skills and a level of expertise in the substantive area involved. The task will seem formidable to the lawyers who are generalists or who have become lazy under the billable hour fee method.

Alternative methods will be successful only if the fee is consistent with the...

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