ILNews

Solos discuss alternatives to the billable hour

Back to TopCommentsE-mailPrintBookmark and Share
Indiana Lawyer Focus

This story has been corrected.

While alternative billing isn't a brand new concept, more solo and small firm attorneys are offering this option to clients to help develop their businesses as clients are more likely to ask their lawyers the question: "What do I get for paying you for your time?"

Three solo practitioners shared with Indiana Lawyer their experiences as to how alternative billing has helped their practices - and how to avoid ethical and financial pitfalls.

Jennifer Ruby, a solo in Indianapolis, offers clients an estate-planning package, with one rate for single clients and another for couples.

To get clients started, she said, she has a list of various services and the costs for each one to see what they are saving if they agree to a package deal. Clients also can choose only the services they need, especially in the case of clients who are terminally ill.

In situations when her hourly rate would cost less than the time actually spent on the package, she will charge the client her hourly rate.

"I do it the way I do because I feel like people who've never gone through the process or don't understand the need for having power of attorney or a will need a lot of education as to why they need to have those documents," she said.

"This is especially the case for young couples who haven't given a lot of thought into who's going to get their stuff, or if something happens to them and they have kids, who will get guardianship," she added.

Ruby also represents small businesses, but continues to bill those clients by the hour - unless she thinks what she's telling them is something they can get for free on the Secretary of State's Web site or elsewhere. In those situations, she may help the client find the right forms, but not bill the client her regular rate for her time.

She does this with the hope they will eventually come back to her when they do need to pay for legal advice, or they will refer friends to her.

Fort Wayne attorney Douglas Powers also offers alternative billing to clients. He was previously with Baker & Daniels for 18 years before going solo about five years ago. He said the billing alternatives have been a matter of trial and error. While at the larger firm, he said he wasn't the one who dealt with billing, so he's been learning as he goes.

One of the most complicated issues about not billing by the hourr is not only knowing how much to bill a client, but also how to keep that client happy by not overcharging, at least in tthe client's mind, while also not undervaluing the service in order to pay bills and maintain a viable practice.

He said he took some risks early on, but being a solo has helped him come up with solutions "on the fly" because he doesn't need to get approval from a committee like he would if he was working for a big firm.

For example, in employee benefits cases he represents, he said he can charge a flat fee if it's something he's already dealt with enough to know what it will likely cost.

He has also representted business disputes where the time spent and outcome were unknown at the beginning. For that kind of case, he has discussed fee options with the client that included a retainer fee. He and the client then agreed on a reasonable monthly fee and what that would include. Then, instead of asking for a third of the contingency, which he said is typical for this kind of case, he would ask for less, such as a fourth of the contingency.

However, his monthly fee would be credited toward the contingency amount he would be owed.

"So if after a year the client has paid $12,000 in monthly fees and I recover $25,000, I get a check for $13,000. And if no contingency is recovered, I keep the monthly payments as a way of sharing the risk," he said.

Ted Waggoner, managing partner of four-person firm Peterson & Waggoner in Rochester, is another proponent of alternative legal billing. He has written about the subject for national publications, including the American Bar Association Journal.

He tells his clients about different scenarios and how the fees will reflect those scenarios. To do this, he said his firm will sometimes use graphs to explain the costs - and discounts - if their legal needs go beyond the scope of the most basic situation he as the lawyer expects can happen. He will also explain the probability of different scenarios and what that could cost.

All three attorneys agreed that having an engagement letter is key to making sure the client is aware of the arrangement early on.

Waggoner added this is important for ethical reasons and to possibly address early on what happens if a client pays a lawyer for a service, but then changes counsel before that service is completed.

All three attorneys also agreed that for any lawyer considering alternative billing, it is vital to keep communication open with the client at all times, and to put the fee agreement in an engagement letter up front. They also agreed that if clients preferred hourly billing, they would honor that.

But having an alternative fee arrangement, Waggoner said, "puts you and your client on the same side of the transaction. The attorney does more research because their ethics provoke them to get the right answer for the client, but not unnecessary research if they have nothing better to do than bill the client a few hours. ... The client is able to budget for the fees, and is able to determine if the client values the case as much as the attorney does."

To get started, Powers read up on alternative billing, including a number of books by the ABA and other national legal organizations.

Waggoner suggested the Web site, http://www.clientrevolution.com/, which recently posted an article about the creative cost of legal work as opposed to the time spent on the work.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. State Farm is sad and filled with woe Edward Rust is no longer CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go All American Girl starred Margaret Cho The Miami Heat coach is nicknamed Spo I hate to paddle but don’t like to row Edward Rust is no longer CEO The Board said it was time for him to go The word souffler is French for blow I love the rain but dislike the snow Ten tosses for a nickel or a penny a throw State Farm is sad and filled with woe Edward Rust is no longer CEO Bambi’s mom was a fawn who became a doe You can’t line up if you don’t get in a row My car isn’t running, “Give me a tow” He had knowledge but wasn’t in the know The Board said it was time for him to go Plant a seed and water it to make it grow Phases of the tide are ebb and flow If you head isn’t hairy you don’t have a fro You can buff your bald head to make it glow State Farm is sad and filled with woe Edward Rust is no longer CEO I like Mike Tyson more than Riddick Bowe A mug of coffee is a cup of joe Call me brother, don’t call me bro When I sing scat I sound like Al Jarreau State Farm is sad and filled with woe The Board said it was time for him to go A former Tigers pitcher was Lerrin LaGrow Ursula Andress was a Bond girl in Dr. No Brian Benben is married to Madeline Stowe Betsy Ross couldn’t knit but she sure could sew He had knowledge but wasn’t in the know Edward Rust is no longer CEO Grand Funk toured with David Allan Coe I said to Shoeless Joe, “Say it ain’t so” Brandon Lee died during the filming of The Crow In 1992 I didn’t vote for Ross Perot State Farm is sad and filled with woe The Board said it was time for him to go A hare is fast and a tortoise is slow The overhead compartment is for luggage to stow Beware from above but look out below I’m gaining momentum, I’ve got big mo He had knowledge but wasn’t in the know Edward Rust is no longer CEO I’ve travelled far but have miles to go My insurance company thinks I’m their ho I’m not their friend but I am their foe Robin Hood had arrows, a quiver and a bow State Farm has a lame duck CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go State Farm is sad and filled with woe

  2. The ADA acts as a tax upon all for the benefit of a few. And, most importantly, the many have no individual say in whether they pay the tax. Those with handicaps suffered in military service should get a pass, but those who are handicapped by accident or birth do NOT deserve that pass. The drivel about "equal access" is spurious because the handicapped HAVE equal access, they just can't effectively use it. That is their problem, not society's. The burden to remediate should be that of those who seek the benefit of some social, constructional, or dimensional change, NOT society generally. Everybody wants to socialize the costs and concentrate the benefits of government intrusion so that they benefit and largely avoid the costs. This simply maintains the constant push to the slop trough, and explains, in part, why the nation is 20 trillion dollars in the hole.

  3. Hey 2 psychs is never enough, since it is statistically unlikely that three will ever agree on anything! New study admits this pseudo science is about as scientifically valid as astrology ... done by via fortune cookie ....John Ioannidis, professor of health research and policy at Stanford University, said the study was impressive and that its results had been eagerly awaited by the scientific community. “Sadly, the picture it paints - a 64% failure rate even among papers published in the best journals in the field - is not very nice about the current status of psychological science in general, and for fields like social psychology it is just devastating,” he said. http://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results

  4. Indianapolis Bar Association President John Trimble and I are on the same page, but it is a very large page with plenty of room for others to join us. As my final Res Gestae article will express in more detail in a few days, the Great Recession hastened a fundamental and permanent sea change for the global legal service profession. Every state bar is facing the same existential questions that thrust the medical profession into national healthcare reform debates. The bench, bar, and law schools must comprehensively reconsider how we define the practice of law and what it means to access justice. If the three principals of the legal service profession do not recast the vision of their roles and responsibilities soon, the marketplace will dictate those roles and responsibilities without regard for the public interests that the legal profession professes to serve.

  5. I have met some highly placed bureaucrats who vehemently disagree, Mr. Smith. This is not your father's time in America. Some ideas are just too politically incorrect too allow spoken, says those who watch over us for the good of their concept of order.

ADVERTISEMENT