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Guest post by: Alvah Parker Become an Author

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Several years ago I had a series of SCORE clients who wanted to start businesses making and selling greeting cards. The cards that they showed me were usually very beautiful and every one was unique.

Pricing the cards was always a problem to them. The market would not pay a price to cover their time. These clients were artists and they were spending hours in the creation process.

My suggestion to make this a viable business was to cut down on the number of designs and find out how to make the same ones over and over in as economic way as possible. Artists don't want to hear that message but a successful business person knows he/she must do it that way.

In the same way a professional must limit his/her practice to two or three specialties and then learn to work quickly, accurately and efficiently to complete the work.

Value Billing versus hourly billing

There has been a lot of talk lately about value billing aka flat fee or fixed fee for attorneys versus billing by the hour. While clients seem to prefer the fixed fee arrangement because they can budget accurately for the expense, attorneys still use the hourly billing method because they fear unexpected problems that would mean working more hours than expected.

Deciding what to charge is as much of a problem to the attorney as it was for the artist who made greeting cards. Included in the pricing is a cost for time. The usual objection to value billing is: Who knows how long this will take? This is especially true for the new attorney.

In an article in 2008 in the ABA Journal Jay Shepherd of Shepherd Law Group in Boston told about his conversion to value billing. He had years of data on his employment law clients that allowed him to come up with the fee schedule.

If you have been billing by the hour for a number of years, you can make a good estimate of what you should bill for the average case. As one criminal attorney I heard speak said about her value billing, "you win some you lose some." If you lose too many you'll need to adjust your fees or your intake procedure.

What about New Attorneys?

For the new attorney finding the right fee is more difficult. Attorneys that are new to the practice of law need to look at what others are charging for a similar service. Until they know what additional value they add to the process they will need to charge "the going rate".

New attorneys who bill by the hour often write off a number of hours because they don't feel the client should be penalized for their learning the process. In the same way if they use a flat fee a new attorney is essentially not including the learning time in the fee.

Watching your billable hours is useful

As a coach and practice advisor I think it is useful to watch your hours so that you know you are being adequately paid for the work that you do. You can learn a lot from monitoring your time.

You may over time find additions to your process that others don't include that make a higher fee justified. It also may help you to identify the types of cases that take longer so you either price them differently or you stop accepting them.

Part of doing meaningful work is feeling well rewarded for the work that you do. The reward comes from earning a good fee and a having a satisfied client.

Using the value billing method is an excellent way to keep you and your client happy. That isn't to say the billable hour won't work, it just means that if you choose to bill by the hour you may have to defend the bill and adjust it at times. This will lead to tension between you and your client and perhaps a bit of dissatisfaction on both sides.

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