How should lawyers charge for services?

There are three ways to charge for legal services: hourly, fixed fee or contingency. I typically charge for work on an hourly basis. Even when I offer clients a "fixed fee", I have to estimate the amount of time it would take and base the estimate on some equivalent amount of time. Other lawyers charge on a contingency, but that is not generally appropriate unless the matter has a significant payout and easily definable objectives.

So how should lawyers charge for their time? Lawyers are are split as to whether to charge for a fixed fee vs. hourly.

Tom Kane, a marketing consultant and former practicing attorney, suggests that small firms can gain an advantage over large firms by "looking seriously at alternatives to billing by the hour".

Chris Marston, founder of Exemplar Law Partners, LLC, a firm that claims to be the "first corporate law firm in the nation to exclusively adopt a fixed price model", believes that fixed pricing must be based on "value to the client".

Jeffrey Lalloway, a divorce lawyer in California, advises "not to hire a lawyer that is not willing to work on a fixed fee basis."

Joseph Grasmik, a business immigration lawyer in New York, publishes "typical fees" on his website with detailed FAQs, but then invites potential clients to request an estimate for a specific matter. Mr. Gasmik also publishes a "do-it-yourself" engagement letter that clients are supposed to fill out and sign based on quoted fees.

My approach is not to be strictly limited to either fixed fee or hourly rates. For some matters, like incorporation, a fixed fee is appropriate because the nature of the work is known and can be estimated based on prior experience. For other matters, the time or work is not known and may be disproportionate to what the matter is worth objectively (because the client wants to pursue it for non-monetary reasons). What is important is to set expectations reasonably and to put the client in control of deciding what services they wish to buy.

In yesterday's blog, I wrote that Knowledge Management will drive law firms of the future. If law firms develop high quality knowledge systems, how will that affect pricing? Will that make fixed fee billing more likely to be offered?

How do you think lawyers should charge for services?

Can blogging help grow a law practice?

This year, my New Year's resolution was to start writing a blog and to contribute regularly. Okay, I'm a little late in starting, but I'm finally ready to put my New Year's resolution in place.

The Plan is to use the blog as a motivator for building a law practice. Not just one that makes money, but one that looks forward, leverages technology, and anticipates new trends. If you will, the law firm of the future. That said, I am currently only a solo practitioner. What I know is that I want to grow my business. I don't know whether that means recruiting partners, hiring paralegals or associates, or adding other staff. I don't know whether that means growing the business physically, virtually or a combination of both.

So, how will a blog help grow a law practice? The idea is to write about one thing at the start of each work day that is critical to building the business. I have a vision for building a law practice. One that provides great quality, leverages technology, and emphasizes customer service.

I imagine that this is how IBM started. The founder of IBM, Tom Watson Sr, as quoted in The E-Myth Revisited, described how IBM built its success:

"IBM is what it is today for three special reasons. The first reason is that, at the very beginning, I had a very clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream - my vision - was in place.

"The second reason was that once I had that picture, I then asked myself how a company which looked like that would have to act. I then created a picture of how IBM would act when it was finally done.

"The third reason IBM has been so successful was that once I had a picture of how IBM would look like when the dream was in place and how such a company would have to act, I then realized that, unless we began to act that way from the very beginning, we would never get there.

"In other words, I realized that for IBM to become a great company it would have to act like a great company long before it ever became one.

"From the very outset, IBM was fashioned after the template of my vision. And each and every day we attempted to model the company after that template. At the end of each day, we asked ourselves how well we did, and discovered the disparity between where we were and where we had committed ourselves to be, and, at the start of the following day, set out to make up for the difference.

"Every day at IBM was a day devoted to business development, not doing business. We didn’t do business at IBM, we built one."

Back to my New Year's resolution.... The promise that I made is that every day I would write about one new thing that would help build a law practice. I plan to focus on five separate areas: legal services (product quality and packaging), business development (marketing and sales), office management (technology, systems, knowledge management), recruiting (virtual and real team building), and finance (billing rates, pricing models, cash flow).

My hope is that by writing this blog everyday I will move my business forward and inspire others to do the same. I also want to encourage others to share their thoughts on growing a law practice, either by posting comments on this blog or by sending email to me directly at v-lawyer@lexpertise.com.