Sorry for no new posts for a while, but I was busy preparing for and taking a two week trip to Russia (more about that in future posts).
One of the great things about the Web is that by clicking through a few links, you can find some amazing things. I just stumbled upon a great post by Allison C. Shields at her Legal Ease Blog, which I'm now adding to my blog roll. This post talks a lot generally about alternatives to the billable hour, but I draw your attention to the second full paragraph. There she has links to three different posts she left on another blog about "value billing."
Value billing is the ultimate alternative fee arrangement. As Allison correctly describes it, value billing completely takes time out of the equation of setting fees for legal clients. Instead, the lawyer and the client work together -- before the legal work starts -- to ascertain the value of the desired legal work to the client.
I know that some lawyers find that approach unimaginable. To these lawyers, if they spend 10 hours advising client A and 10 hours advising client B, then given their hourly rates, A and B should be billed the same.
But think about it -- that way of thinking completely ignores each lawyer's intrinsic value. For example, assume there is a very good and experienced tax lawyer, "Joe." Joe spends 10 hours advising client A on a routine filing inquiry from the IRS. But the 10 hours spent advising client B result in B saving $1 million in taxes.
Certainly, the latter 10 hours were much more valuable to company B than the former 10 hours were to company A. So why should Joe charge each client the same (i.e., 10 hours x his hourly rate)? Is that not unfair to tax lawyer Joe? After all, client B took full advantage of Joe's legal education and experience, not to mention Joe's innate creativity. Shouldn't Joe be compensated more (compared to client A) for that?
I know this is still controversial to many in our profession, but it is a debate worth having. I encourage everyone to read Allison's primer on value billing and engage in the debate.
One of the great things about the Web is that by clicking through a few links, you can find some amazing things. I just stumbled upon a great post by Allison C. Shields at her Legal Ease Blog, which I'm now adding to my blog roll. This post talks a lot generally about alternatives to the billable hour, but I draw your attention to the second full paragraph. There she has links to three different posts she left on another blog about "value billing."
Value billing is the ultimate alternative fee arrangement. As Allison correctly describes it, value billing completely takes time out of the equation of setting fees for legal clients. Instead, the lawyer and the client work together -- before the legal work starts -- to ascertain the value of the desired legal work to the client.
I know that some lawyers find that approach unimaginable. To these lawyers, if they spend 10 hours advising client A and 10 hours advising client B, then given their hourly rates, A and B should be billed the same.
But think about it -- that way of thinking completely ignores each lawyer's intrinsic value. For example, assume there is a very good and experienced tax lawyer, "Joe." Joe spends 10 hours advising client A on a routine filing inquiry from the IRS. But the 10 hours spent advising client B result in B saving $1 million in taxes.
Certainly, the latter 10 hours were much more valuable to company B than the former 10 hours were to company A. So why should Joe charge each client the same (i.e., 10 hours x his hourly rate)? Is that not unfair to tax lawyer Joe? After all, client B took full advantage of Joe's legal education and experience, not to mention Joe's innate creativity. Shouldn't Joe be compensated more (compared to client A) for that?
I know this is still controversial to many in our profession, but it is a debate worth having. I encourage everyone to read Allison's primer on value billing and engage in the debate.
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