Why your law firm should offer flat fee billing

Flat fee billing gives law firms an edge by providing clients with predictable costs, reducing stress and uncertainty. This model also benefits attorneys through better control over their time and income.

 

 

Flat fee billing has grown in popularity over the past few years. Legal clients want—and often need—more predictability and transparency in their bills.

Law firms willing to provide that predictability have a definite edge over those who hold tightly to the billable hour model.

 

What is flat fee billing?

Flat fee billing is simple: Lawyers charge a single one-time fee in exchange for their legal service(s).

This pricing model works nicely for legal work that is transactional and predictable:

• Estate Planning
• Contract review
• Contract preparation
• DUI cases
• Bankruptcy
• Uncontested divorce
• Business Formation

 

How to determine the price of flat fee legal services

Here’s the truth: Your clients don’t care how much time you spend on their cases. The only reason they consider it at all is because it usually affects how much they pay you.

In reality, your clients care about the value they receive from your services. With that in mind, you may be able to charge more for some services than you would for others—even if they aren’t as time-consuming for you.

To determine the prices of your flat fees, consider the basic profitability formula:

Profit = Revenue – Expenses

Determine:

• the amount of time you typically spend on the legal service in question
• the amount of money your clients would be willing to pay based on the value they gain
• the expenses required to run your law firm divided by the number of clients you typically serve

 

Your billing model affects your day-to-day experience

Endlessly managing your time by fractions of an hour is overwhelming.

Flat fee billing empowers attorneys to take control of their time. Choose to work on your cases how and when you think is best.

Everyone has different work methods, goals, and lives outside the office. Flat fee billing gives you more control over the way you work by removing the stress of strict timekeeping.

Additionally, flat fees are typically paid in full before legal work is started. Meaning you never have to chase clients down for missing payments.

 

Flat fee billing is scalable

Flat fee billing is a predictable, scalable pricing model.

With traditional hourly billing, you face two main variables that make it difficult to predict future income:

• The number of cases you’ll have
• The time you’ll spend on them

Flat fee billing removes that second variable entirely. Regardless of the time you end up spending on a case, you know the total income you’ll receive.

 

Hourly billing is stressful for your clients

It’s difficult to impossible for clients to manage their budget when they don’t know what your legal services will end up costing them. This uncertainty leads to:

• Stress and anxiety throughout the entire legal process
• Questioning if you’re spending the correct amount of time on their case
• Feeling pressured to rush through their interactions with you
• Valuable being trust lost
• Questions and concerns left unanswered

Hourly billing emphasizes the value of your time, while flat fee billing emphasizes the value of your work and expertise.

 

Predictability is easy to sell

The average person doesn’t really know what to look for in an attorney. So they end up shopping around on price.

When you offer an (already stressed) potential new client a single flat fee upfront, you’re offering them more than just predictability. You’re offering them peace of mind.

Plus, flat fee billing creates trust between you and your potential new clients from the first interaction. They know that you care about their case and won’t try to squeeze as much money out of them as you possibly can.

At the end of the day, flat fee billing gives your law firm the advantage of being able to tell potential clients, “Here’s what you’ll pay. No surprises.”