Trends in the legal market identified by the Association of Corporate Counsel (ACC) 2017 report indicate that the most pertinent considerations for a client when engaging a firm are flexible billing methods, knowledge specialisation and individual lawyers, followed by past experience, tailored advice and personal relationships. Law firms that recognise and tailor their services to those needs will not only enjoy a healthy client base but also maintain committed and satisfied staff.
The ACC report also noted that, because of prevailing economic conditions, clients are carefully considering their legal budgets to ensure they are receiving real value for legal services. The overriding sentiment is that client resources are most efficiently and effectively spent by employing a lawyer that has the specialist knowledge to achieve desired outcomes at a fair price.
The renewed focus on client value has led to a rise in the use of value based billing, otherwise known as fixed fee billing. This value based approach replaces the ‘cost-plus’ method of charging hourly rates and has many flow on benefits for both the client and the law firm.
Our experience has shown that value based billing requires law firms to have a greater understanding of the true cost of providing legal services. A better understanding of these costs enables lawyers to offer the client a transparent and upfront price that is agreed in advance, adequately budgeted for and linked to the performance and completion of specific outcomes. These are all essential elements for building a collaborative and long-lasting client-lawyer relationship.
Agreeing the price before work is commenced allows the law firm to holistically consider and allocate all internal resources required to achieve the stated outcome. This approach provides greater certainty to the client and reassurance that costs will not unexpectedly blow out. Lawyers also benefit from this approach as it provides greater clarity and flexibility in planning and producing the work required without the pressures of billing as many hours as possible. Removing the pressures of time based billing also increases workplace satisfaction by allowing lawyers to focus on achieving the outcome as agreed with the client.
Glen McLeod Legal is a boutique Town Planning and Environment law firm that applies the principles of value based billing. We can be contacted by telephone on (08) 6460 5179 or by email at email@example.com.