Value Billing Saves Lawyers and Clients Headaches and Overheads

The problem with federal and state budget cuts within the legal system is that these measures eliminate not only the costs associated with court systems, but also the much-needed justice that comes with them.

Today, Thomson Reuters reports on some alarming statistics: During the past three years, 42 states have cut their judicial budgets, with some decreasing budgets by as much as 12 percent. Over two-thirds of states have fired court employees and even more aren’t hiring to fill clerk vacancies. Finally, an astounding 23 states have curtailed their court operating hours,reports Joseph Schuman for Thomson Reuters (TR).

As a result of these disturbing trends, the ABA has set up aTask Force on the Preservation of the Justice System led by David Boies and Theodore Olson.

“There has not been a natural constituency for the justice system,” David Boies, managing partner with Boies, Schiller & Flexner LLP, explained to the Times (via TR).

“We are now at the point where funding failures are notmerely causing inconvenience, annoyances and burdens; the current funding failures are resulting in the failure to deliver basic justice.”

The other half of the court system—lawyers and their firm—is facing similar funding failures and all the inconveniences, annoyances, and burdens that come with it. Within firms, budget deficiencies threaten the foundation on which lawyers have based their practice—seeking justice forthe common man, winning cases as well as the respect of their peers andclients.

Instead of justice, attorneys fees have become the center of attorney-client relationships. Hourly billing during a recession has caused firmmanagers daily headaches, with clients pushing for lower legal fees and firms fighting to keep higher profit margins.

Attorneys spend a noticeable amount of time fixing their timesheets and writing work descriptions in order to stay accountable to new, more stringent requirements by their clients. Even then, hours are cut to please courts and clients alike.

“[I remember when] lawyers had relationships with clients: If there was an issue with the bill, we’d sit down and talk about it,” ABA President Stephen N. Zack said to the ABA Now.

Today, too many attorney-client disagreements result from confusion over billing. “Both in-house and outside counsel hate the billable hour. It hurts relationships,” lamented Joseph K. West, associate generalcounsel, Walmart, to the ABA Now.

Budget cuts and economic inefficiency caused the Morrow County Municipal Court in Ohio—just one of many courts—to limit its hours to a four-day workweek, reported TR. Firms may be the next cog to collapse within the legal system. So, instead of shutting down under fiscal pressure, law firms should start looking to the past and adapt.

“I remember when lawyers billed for legal services rendered,” Zack exaplained to the ABA Now. And that’s exactly what firms are re-initiation today.

Fixed fees, flat fees, and success fees, are just a few names for what is known as “value billing.” Value billing is a flat rate forwork for the year. This billing scheme frees lawyers and firms from recording billable hours and allows attorneys to go back to the basics, focusing on client relationships, winning cases, and making meaningful impacts on the industry of law.

“We became lawyers because we’re passionate about justice,we want to be liked and respected, and we enjoy winning,” Boies said to the ABA Now.  “Value billing feeds all of those reasons.”

The ABA points out that value billing also provides anopportunity for firms to gain expertise in areas in which they may not be know n s specialists. For example, “If a corporation has a flat fee for a year, a firm can go the company and say, ‘You’re already paying us, you might as well use us,’” explained Boies to the ABA Now.

When a client is tempted to hire another firm for specialized services, value billing keeps that business in-house. Corporations won’t lose a dime with a flat-fee structure, and your firm is given the opportunity to show off and develop its diversified services.

Finally, flat fee arrangements allow lawyers to recalibrate their priorities and return to a love of the law and a passion for justice.

Don’t let 10-minute increments of billable time lead to the demise of a firm you worked 10 years or more to build.



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