Is Hourly Billing Just a Fixed Fee in Another Form?

Tom Kane of the Legal Marketing Blog wrote an interesting post yesterday entitled, “Has the Hourly Billing Model Become an AFA?” His post points out that even when lawyers bill by the hour, the client will only pay what the client thinks the lawyer’s services are worth.

When lawyers write off or write down their fees – or when clients pay only a portion of the lawyer’s bill, aren’t both lawyer and client saying that the hourly fee really doesn’t mean anything, and that there is a particular (fixed) fee that is ‘fair’ for the work?

What really matters isn’t your hourly rate, it’s your realization rate (what you are actually paid), and realization rates have been declining.

Bottom line? As I said in the seminar I did at my local bar association yesterday on getting paid, it’s time for lawyers to have more in-depth discussions with clients at the beginning of the engagement about what the client expects, what kind of service they are looking for, and what the client values or thinks is important. Whether you continue to bill hourly or move on to newer forms of billing, project management – and management of clients’ expectations – is key.

photo credit: http://flic.kr/p/awWdFW