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Guest post by: Tom Dwyer Become an Author

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The billable hour is the standard fee model used by law firms all over the world; and it is standard in every legal billing software package on the market today. Yet some practices are turning their back on this billing model, developing new flat-fee rate structures that better benefit both the clients and the law practices. Even if you decide to transition to a flat-fee structure, attorney billing software is still a very useful tool for analyzing costs, tracking productivity and billing complex cases.

Advantages of Flat-Fee Billing

Most legal cases are routine. An experienced attorney can look at a case and estimate the time needed, almost to the point of entering the hours into the legal billing software ahead of time. If the cost of the case is already known, why not just negotiate a flat, or fixed, fee up front?

Flat fees lead to more efficient legal operations; the firm has incentive to find ways to save time and money. The practice works to get the case finished more quickly so they can take on more work. Clients prefer the arrangement because they know what the costs will be going in, and therefore avoid most billing disputes. Fixed billing saves the firm more money because they don't have to produce attorney billing software reports to back up disputed fees.

How To Implement Flat-Fee Billing

One reason flat-fee billing has become popular recently is the advent of new generations of legal billing software that make it easy to analyze costs. Firms can look at similar cases and make a reasonable estimate of how much time and labor will be necessary for a new case. Attorneys can generally calculate accurate and fair fees for all but the most complex cases.

This doesn't mean all cases will be charged on a flat-fee basis. Some situations will require traditional billable hours tracked with attorney billing software. Others might use blended strategies where different segments of the case are priced with different methods. The key is to consider billing as an open negotiation with the client. It's no good to win a case but lose a client who feels they overpaid for legal services.

Hours Are Still Tracked With Flat Fees

Attorney billing software still has a valuable role even if most cases fall under the new flat-fee structure: the firm still needs to monitor the hours worked and evaluate the efficiency of the law practice. If nothing else, this allows the practice to evaluate whether the current fees are appropriate. As the firm becomes more efficient, it may be able to lower fees to be more competitive or increase case load. In contrast, the firm may find initial fee estimates were too low, and future cases can be priced more accurately with updated productivity figures from the legal billing software.

The transition to a flat-fee system is likely to be a gradual process, but as a practice sees that both attorneys and clients like the billing model, there will be motivation to broaden the fee structure to include more cases.

A flat-fee structure could be a win-win for your law firm and clients. With motivation to work more efficiently, a practice can take on more work and clients get more value for their dollar. Modern legal billing software has a place in helping attorneys analyze costs, track productivity and bill more complex cases for the greater good of all concerned.

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