Alternative Billing and Other Ways to Streamline Costs

Most management experts agree that “the more likely surprises are, the more appropriate the billable hour”, as per a recent Crain’s post. However, as firms seek to streamline their operations, the idea of at least considering alternative billing is becoming de rigueur in a few arenas.  Fixed fees are the bill method of choice for some of these firms when routine is involved.  Crain’s Chicago Business recently spoke with Chas Bellock of Bellock and Coogan Ltd. in Oak Brook (pictured here), who gladly offers fixed fees on matters like real estate planning and residential real estate.   “They are repetitive, and we have a feel for what the hours are going to be,” Bellock says.  His firm hasn’t let go of hourly billing, however.   

In commercial real estate, for instance, they have no way of forecasting every possible situation “that were never envisioned when you fixed the fee,” explains Bellock.  

Another way in which firms are beginning to streamline is by studying data of existing cases so that costs may be more accurately pegged.  Raymond Werner, managing partner at Amstein & Lehr LLP, has his people examine the information found in the firm’s accounting system.  “There are ways to make the unpredictable a bit less so,” says Werner “and smart law firms use them if they’re going to be offering alternative fees.”  Werner also keeps an open line of communication with practice group leaders.  “It’s key that you have good data, so you can look back at similar projects and say ‘how much did this cost?’”, says Werner.  

But what about nebulous matters, such as those that go to litigation? While Werner admits it’s difficult to predict and therefore price the outcome of an entire case, you can price portions of it.  For example, he explains, an attorney could tell his or her client up front how much it would cost to file a motion to dismiss. (This figure would, of course, still be in the ballpark range.)  

How else are firms seeking to become more cost-effective? There’s always a semi-virtual law firm. Technology can effectively reduce operational expenses by automating services; some of what is usually done one-on-one or manually can be done online.  For instance, an online form might be used in lieu of a comprehensive intake session.  

Stephanie Kimbro, a consultant on virtual law offices for Total Attorneys LLC out of Chicago, shows attorneys how technology can help them cut corners with virtual know-how, thereby making their operations more efficient. Total Attorneys brought in $31 Million in revenue in 2009, so the concept seems to have taken off. Ms. Kimbro is able to offer lower prices, herself, using a form that handles intake in her own estate planning firm in Wilmington, NC.   

As for alternative fees, there is a mitigating factor when considering implementing them, says Werner of Amstein & Lehr.  You’ve got to introduce trust into the equation.  An effort must be made to ensure that neither the client nor the firm believes the other is profiting unduly.  The bottom line regarding fees, says Werner is that each party must be of the opinion that “the law firm isn’t getting rich on it and the client isn’t paying too little.”   For more information on this story, go to   http://www.chicagobusiness.com/article/20110219/ISSUE02/302199998/sometimes-the-old-billable-hour-is-best

Sometimes the old billable hour is best	                                             | Focus |  Crain's Chicago Business

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