Having confidence in not just your attorney’s advice but also in the amount of fees incurred in rendering that advice is the key to any successful attorney-client relationship. But many law firms miss this point; and, instead, build institutional obstacles to managing a client’s costs. For example, some firms restrict the relationship attorney from reducing an invoice, if needed, to reflect the actual value of the work.
Here at our firm we look to the nature of each matter to determine whether an hourly rate or an alternative billing structure is more appropriate. And we believe in discussing with our clients the expected and ongoing costs of a transaction or litigation matter to help our clients manage their costs and objectives.
When a new matter comes to one of our attorneys, we will consider the following billing structures using the criteria discussed below. It is important to first emphasize that our firm has a history of evaluating and implementing alternative billing structures for complex litigation and transactional matters. So we can go beyond the theoretical when discussing whether an alternative billing structure is appropriate for your matter.
Billing by the Hour
Our firm uses the billable hour structure for most of our matters because it is the structure that most closely measures the effort required to meet the client’s needs. For many legal matters the amount of effort is difficult to measure in advance. Given this forecasting difficulty, the billable hour may best fit a particular matter.
We will consider flat fees in certain circumstances, including when a client sends us a high volume of similar matters or when our firm’s anticipated effort can be forecast within a reasonable range.
Flat Fees by Stage
Efforts that can be carved into discrete stages might be appropriate for a staged flat fee. Thus, if there are four stages to a matter, we can set a flat fee for each stage. And if we do not need to complete certain stages, then the client does not pay us for those stages. This fee structure is a useful hybrid between billing by the hour and a pure flat fee because it can give the client greater cost certainty than the billable hour while avoiding a single flat fee payment that reflects a higher anticipated fee than the actual time worked.
Reduced Fee Plus Success Fee
We utilize this structure in matters where the combination of effort, expected economic benefit and risk justify accepting a reduced guaranteed fee coupled with a success fee if the matter concludes favorably. This structure is particularly appropriate in higher risk, higher reward matters.