Too many clients go to big firms with the fancy offices, looking for a "tough" lawyer. Often, the first meeting is with a partner with a big reputation. They pay a lot of money for that big reputation. Before they know it, there are three lawyers working on their case and they can't ever meet or even talk on the telephone to the lawyer they thought they'd hired. Some firms charge an initial retainer in the thousands of dollars for just a few hours of work, and then want another payment of even more thousands of dollars. Before long, the client is dissatisfied with the service he's getting and the money is gone. And sometimes, the big reputation makes clumsy and unnecessary mistakes.
Most of these lawyers will charge you by the hour. Almost all of them will ask for a "retainer." This is a deposit against future work. The money goes into a client funds account and the attorney charges for work, based on his or her hourly rate, times the number of minutes spent (usually in 2 minute increments). Their bills look like this:
| Date | Description | Time Spent | Amount Charged |
|---|---|---|---|
| 7/27/09 | Telephone call with client | 0.4 | $100.00 |
| 7/29/09 | Received and reviewed settlement proposal from opposing counsel | 2.6 | $650.00 |
| 7/30/09 | Appeared for temporary support hearing in court before Judge Jones | 3.6 | $900.00 |
| Total: | 6.6 | $1,650.00 | |
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TOTAL TIME 6.6 HOURS X $250.00/HOUR = $1,650.00 TOTAL RETAINER JULY 1, 2009 = $5,450.00 TOTAL AMOUNT CHARGED JULY 31, 2009 = $1,650.00 TOTAL REMAINING IN CLIENT FUNDS ACCOUNT = $3,800.00 |
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Imagine, for a moment, what this bill would look like if the lawyer had billed an entire month's worth of work! Then imagine what it would look like if the lawyer billed at $325.00 an hour ($2,145.00) or $450.00 an hour ($2,970.00).
Keep in mind too, that most attorneys ask clients to "replenish" a retainer when it drops to a certain level. No matter how carefully lawyers explain in writing that the "retainer" is only a deposit, clients often misunderstand what that means and think that the "retainer" is the total cost of the case, or that they can persuade the lawyer to change the amount that has to be paid after a certain point.
It's a bottomless pit. We've been billing like this for a long time and we are as sick and tired of it as clients are. No matter how reasonable our hourly rates, we don't want our focus to be on how much time is spent and how tasks are performed. What we want to do is focus on accomplishing the goals of the client and achieving the best result possible.
We are also sick and tired of turning away clients who need our help because they can't afford high-end retainer agreements. We do what we do because we care about serving clients. We believe we can do good and do well. We've completely restructured our pricing in a way that will allow us to provide services to a wider range of clients.
We also have found that by taking the time to focus on the mission and objectives of the client, by conducting a careful assessment of the case at the outset, we can better screen clients whose mission may not be consistent with our approach to resolving family cases, or who might want results that can't reasonably be achieved.
We've found a way to avoid all the distress caused by hourly billing by offering a new method of pricing known as "value pricing." We want to give clients the best service possible and provide the results they seek. We are certain that offering clients customized options for their cases with a price that they can count on is one of the best ways to do this.
Some of the advantages of value pricing are:
Certainty: Our services are tailored to the client's needs at the beginning of a case so they know what work will be done, how much it will cost, and when they have to pay.
Using the old "billable hour" method there is no way for either the lawyer or the client to know how much the final cost of a case will be. In fact, in our old engagement agreements, we specifically emphasized that fact.
We even required clients to initial each paragraph of the agreement and spent an entire hour explaining each part of it to try to bring home the point. Even then, clients still didn't get it. Either they didn't understand the reality of what could happen in the case or they assumed we'd change the way we were paid if the case got too expensive.
Some folks would say they'd been to other lawyers who didn't charge so much for a retainer deposit. What they didn't understand was that the only difference a lower retainer deposit would make to them was that they'd probably have to pay the same amount a lot faster.
We've finally had enough, and if clients accept the alternatives we offer under our value pricing approach, we aim to dump the billable hour entirely.
With value pricing, the charges to the client are clear, specific, and tailored to their case. This gives clients the chance to decide right from the start if the matter is worth the money it will
cost them.
Tailored Pricing: We work closely with each potential client to develop a plan that provides them with a timely evaluation, in writing, of the options available to them, the costs and benefits of each possible course of action, and the mission of each client. We will still make the old "billable hour/retainer deposit" method available to clients who really want to use it, but we also provide a range of alternatives.
Results-Oriented Service: Because we set our prices based on the results the client gives us at the beginning of the case, and not on how much time we spend billing time, we have an incentive to get the client the results he or she needs, as quickly and efficiently as we can. We've also taken a tip from colleagues around the country by placing a "cap" on our fees. The combination of these two approaches means clients who agree to this approach will never again get a bill for services that are beyond the amount agreed to in the engagement agreement.