Make More Money by Offering Alternative Fee Arrangements
Billing by the hour, especially for minute and insignificant tasks, can result in larger-than-expected client bills. This leads to unhappy clients, and unhappy clients are less than likely to pay on time, and more likely to ask for discounts.
If you’ve ever had a billing dispute with a client, then you know that these kinds of altercations are one of the top causes of poor client-attorney relationships (surprise!). Blame is often placed on the client for not understanding their particular situation and any billing discrepancies.
So how can this be remedied? Offer Alternative Fee Arrangements.
While hourly billing has been the standard fee structure for performing legal services and will no doubt continue to be a primary billing options, clients are increasingly demanding Alternative Fee Arrangements (AFAs). In fact, AFAs have soared to an all-time high. By offering AFAs and having clear communication, law firms can reduce the risk of possible fee and/or billing disputes. Catering more to a client’s needs will also lead to higher client satisfaction as well as create more opportunities for revenue growth through possible repeat customers or referrals.
Also, think about this: the less time it takes for you to complete a task under an hourly billing strategy, the less money you make. You’re being penalized for efficiency! Try employing a Contingency Fee or Success Fee structure, which ultimately rewards attorneys for swiftness and proficiency.
Retainer fees are also a great way to guarantee payment, since clients need to provide a down payment up front in order to secure legal services. Fixed and/or flat fees can also reduce billing disputes since they are so simple and straight-forward.
While shifting your mindset away from hourly billing may seem daunting and unsettling, it’s been shown that clients prefer the predictability of AFAs. Offering these payment options can help to bring in clients that would have otherwise gone with other firms. They may not make sense for every case, but as long as you do your homework, AFAs can lead to great financial success for both the firm and the client.