Flat Fees or Hourly Billing: What is More Efficient?
As usual in the law community, there is a discussion regarding whether attorneys should bill clients by the project or by time. My Shingle has a good point to add to the discussion: who bears the cost of overage if the project costs more than expected? I completely agree with the article’s main point:
When I give a flat fee estimate, I will eat the cost unless the extra work is caused by the client (e.g., client lies about material issues in the case) or created by unforseen events (e.g., change in a 50 year precedent that leads to multiple appeals). My feeling is that as the attorney, I am the expert on estimating fees, so I should bear the risk of an inaccurate estimate.
But Which is More Efficient?
My question here is which method of billing is more efficient. To me, it all comes down to which method costs more time to administer. If an attorney does a certain task a lot and can quickly and accurately determine a flat fee to charge, that would be the more efficient billing method. However, if the attorney does not do a task very often and would have to take a lot of time to estimate the cost, hourly billing would probably work better.
Thus, I think that efficiency lies in the hands of attorneys. We must know what we can do in a specified amount of time. This helps clients get the best value for their money. And that’s what attorneys should be doing: providing the best services possible to their clients for the most appropriate price.
[tags]legal andrew, billing, law firm, attorney, lawyer, flat fee, hourly[/tags]
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