10 Tips for Moving Away From Hourly Billing
Welcome to this month's article of Let’s Be Frank, a monthly newsletter series hosted on LinkedIn and authored by our founder Digby. If you are interested in following along pop over to the Let’s Be Frank LinkedIn page here and hit the subscribe button to have these articles sent straight to your inbox.
Now that we have been at it for over two years, I wanted to share some easy takeaways.
You Need a Champion.
There are so many great reasons to move away from an hourly billing model, whether it be lawyer burnout, fear of being left behind, clients demanding price certainty, frustration with client misalignment and desire for better communication, or a belief there is a more profitable way to practice law. You will definitely need someone to drive change; someone who is passionate and determined to see it through. This is your champion.
Create Support for the Champion.
If the champion goes at it alone, the natural benefits of TEAM are lost. Spreading the load is always better. A team culture creates the foundation for change through responsibility, accountability, celebration of success, and healthy debate. At DL&Co. it was a complete team effort.
Change Management.
Change does not occur just because someone says “ time to do things completely differently.” There are phases that everyone must go through, such as initially becoming aware of the issue/opportunity. There is a lot of support out there, such as business coaches, to help steer you through significant change.
Go for It.
If you just kinda try it out, you will almost certainly lose momentum. At DL&Co. we definitely did not dip our toe into the shallow end, we dove right into the deep end. We wanted to be clear about our commitment to change, so we hired a branding company to help us with the launch, and gave it a name - and “Frank Fee'' was created.
Adding Legal Tech - AltFee.
When we started with Frank Fee, we did all of our pricing with a manual system, which we spent about six months with full time help creating. Now there is legal tech to use in the conversion away from hourly billing. With legal tech, it is SO much easier to bill with agreed upon pricing up front, than when we first made the decision to do so in March 2020. Most of the difficult work has been done for you. The system has been established and there is proof that it works.
Create the First Guideline.
When AltFee arrives, it will come with a wide selection of template guidelines, including placeholders for base amounts and factors. The very next pricing opportunity you have, build the guideline for that project type. Look back at what you learned when you previously completed a similar type of project. Don’t worry about perfection, as AltFee is built for asynchronous learning, which encourages continuous updating of the guidelines. If you need to, you can also use your intuition to adjust base amounts or factors for any new project.
Everyone Prices.
For us, it has been key to get the paralegals and the junior lawyers doing much of the pricing. It ensures that it is not a top down initiative. There is firm wide buy-in, and the people at the beginning of their career really start to understand the connection between effort, value and price. You are also likely to see more receptivity from people early in their career, versus those that are entrenched in one way of doing things.
Take Advantage of Your Youths.
Our young people live in a world that changes at warp speed. They are used to change and new tech, value it, and want to be leading the charge.
Celebrate.
Yes! It is vital that you share even your smallest successes. Never miss an opportunity, as this is what creates traction. Change can seem daunting, but if taken in bite size pieces, it will be a lot easier. Share key data often (monthly). Keep tabs on how many projects have been priced in the last month, who is doing most of the pricing, which project types are priced, and billing realization rates for those projects. Goal set around this data, and celebrate contribution. It is amazing how important recognition is, especially before your peers.
Entrepreneurial Spirit.
Don’t be afraid of change, embrace it. Change is what leads to constant improvement. Don’t wait for others to prove it will work, be forward thinking with an eye on what the world will look like three years down the road. Legal tech is exploding and it will be difficult to compete if you do not stay ahead of the curve.
I hope this gives you some ideas to use for when you move away from hourly billing. If you have other thoughts, please comment, as together we can make a difference.
Until next time,
