Coming from a commercial litigation background, I was well versed in the billable hour. So, when I started my own practice, that was my starting point. It’s what I knew.
Over time, my practice transitioned from the traditional hourly billing model to primarily flat fee billing for a few different reasons. Here are three:
1. Every new client brings new issues, new questions and new research. Given the area of law that I am in, that could translate to a lot of research for me to ‘get up to speed’. And while yes, research is an inherent part of advising our clients there are times that I did not feel it was fair for my clients to pay for that ‘learning curve’ especially when I knew that it would be a skill that would serve me well for future clients.
2. My clients are entrepreneurs and startups that need the certainty of project based billing. They are balancing a budget and want to know what their legal costs will be. Knowing what I charge per project alleviates the anxiety and avoids the ‘sticker shock’ at the end of the matter. It also encourages my clients to give me all the information I need to help them with their legal issues. If a client is always anxious about the billing, they tend to minimize communication for fear that you are charging for every minute. Giving them certainty of billing allows for trust and building relationships.
3. I’m a muller. As I write this, I am contemplating a contract for a client. Project billing allows me to mull over issues at my leisure. Mulling is also not limited to my desk so if I had to bill for every minute there would be scraps of paper everywhere with time/client/matter scribbled all over. The only people that win in that scenario are the Post-It people.
That being said, project based billing is not for everyone or for every matter. It generally works well when there is one side involved, mine. For litigation practices with opposing counsel and other factors to consider, flat fee billing may be more of a challenge to implement.. Set expectations up front, but be comfortable with the fact that sometimes you will put in more time than you estimated. You learn from that, correct and move on.
Natalie Sulimani is the founder of Sulimani Law Firm, PC. She is engaged in a wide variety of intellectual property, technology and general corporate matters with a strong focus on start-ups and entrepreneurs. Natalie is Co-Chair of the New York County Lawyers’ Association (NYCLA)’s Cyberspace Law Committee and is a frequent speaker on intellectual property and small business matters. Natalie is admitted to practice in New York and in the Southern District Court of New York. Check out Natalie on Twitter and Facebook.