Hourly billing and the Devil's Advocate

My firm, Shepherd, is preparing to drop hourly billing in favor of Up-Front Pricing. And I mean completely drop, in that we're going to stop billing hourly, period. I feel like I've read everything in support of value pricing, with Ron Baker's works leading the charge. While still squarely in the minority, there are plenty of advocates for value pricing out there.

What I can't find are advocates of hourly billing. And I don't mean advocates who believe hourly billing is good for lawyers — that's why hourly billing began in the 1960s, after studies showed that law firms could make more money using it.

I mean advocates of hourly billing who believe it's good for clients. What proclient arguments do you have for sticking with a system that encourages lawyers to take more time to finish their work?

Comments

[Christopher Mirabile]

One potential argument in favor of hourly billing would be at the extreme low end of the project spectrum where you just want 15 minutes of advice or a quick letter or the like. Surely no price list of specific activities could ever be granular enough to avoid over-charging in all such cases?

[Jay Shepherd]

Christopher, a respected general counsel, makes a good point about the 15-minute quick hit for advice. But that's an argument for being smart about how you price these services, rather than a reason to stick with an anticlient, cost-based, surprise-inducing method of billing. With our firm's Up-Front Pricing, something that's too small to be a project is charged at a small, fixed price. If a client's employment-law activity leads to frequent quick hits like this, a monthly price for unlimited advice becomes more economical. Thanks for the post. — Jay

[Ron Baker]

Hi Jay,

Congratulations for deciding to be one of the pioneers in your profession by burying the billable hour!

It's trailblazers such as yourself that will, ultimately, bury this pernicious pricing strategy, which fails our clients and our professions.

Please don't hesitate to contact any VeraSage Fellow if we can be of any assistance.

And I hope you sign our Declaration of Independence, and eventually provide us with a case study on your firm's progress for our "Trailblazers" section.

Congratulations and best wishes!

Ron Baker, Founder
VeraSage Institute