Spartanburg Divorce Lawyer & Attorney : Stevens-MacPhail Law Firm : South Carolina Family Law Serving Columbia, Charleston, Greenville, Hilton Head Island

Following up my posts (here, here, and here)over the past several weeks about using fixed fees instead of charging by the hour, I learned that a Boston firm has banned the billable hour.  In fact, the Shepherd Law Group has gone so far as to tell its clients that if they insist on having attorneys who bill by the hour for their time, they should retain another law firm!

The firm's founding partner, Jay Shepherd, says "Hourly billing is wrong, and it's anti-client.  There's a disincentive to be efficient since you get paid more if you take longer to finish a matter—even though the client wants it to be finished as fast and efficiently as possible."  I agree with Mr. Shepherd, and I made many of those same points in my prior posts on this subject.

On his blog, Gruntled Employees, Mr. Shepherd proudly stated that "during 2007, Shepherd Law Group has billed exactly 0.0 hours."   His post references several other articles that discuss the problems with the hourly billing model, and it is well worth a read.  Also, the Boston Globe published an article last week which takes a close look at this same issue.

Source:  "Boston Law Firm Bans Billable Hour" by Martha Neil, published in the ABA Journal Weekly Newsletter.

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Why is it that most family law attorneys handle cases on an hourly basis?  Did they consider and evaluate the many different billing options that are available and then conclude that this was the best one?  I doubt it.  I believe that the reason that attorneys use that archaic method is simply because that was the way they were taught or the way it has always been done at their firms.

When presented with the possibility of handling cases on a fixed fee basis, most attorneys say that domestic cases are too unpredictable to enable them to establish a fee with any confidence.  However, I believe that is a cop out answer.  The fact is that insurance actuaries establish premiums for things such as floods, earthquakes, hurricanes, and even death – all of which are certainly more difficult to predict than Family Court cases.  If they can do it with some level of precision, why can’t attorneys?  The answer is that we can and we should.

Attorneys benefit in the following ways from handling family law cases on a fixed fee basis:

• No longer having to track every minute of every day will mean that the attorney is no longer a slave to the billable hour.  For most attorneys, tracking time is a stressful, cumbersome, and tedious process.  It is inconvenient and counterproductive to have to continuously stop working on clients' cases to record what time was spent on each one, and then to track and review the recorded time at the end of each day or week.
• The attorney will gain several extra hours per week that used to be spent recording time, and this newly found time can be spent working on clients’ files, spending time with family, or relaxing – all of which are better than chasing the tail of the billable hour.
• Even more time will be saved by not having to send out as many bills per month, record and process the payments, and deal with the trust accounting issues that are involved with retainers.
• There should be no disputes with clients over the amount of a bill and/or no questions to be answered about the amount of time that was spent on a given activity, because the amount charged for the services was negotiated and agreed upon before the representation began.
• Handling cases in this manner gives the attorney the ability to decide up front if he/she wishes to represent someone for a reduced fee, such as military personnel, teachers, or other public servants.
• There are other benefits to the attorney, such as the additional leverage gained when establishing fees in this manner and the ability to deposit these fees directly into the attorney's operating account if the fee agreement is drafted properly.

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The American Bar Association released a report just over five years ago that was very critical of the “standard” way that many (if not most) attorneys charge their clients for their services.  Its conclusion was that “[t]he billable hour is fundamentally about quantity over quality, repetition over creativity.”  To me, that doesn't sound like it contributes at all to what should be the attorney's ultimate goal -- providing clients with the best possible service.

Approximately two years ago, I began handling all family law cases on a fixed fee basis instead of charging by the hour as I had done for many years.  When a client hires an attorney on an hourly basis, that client is basically writing the attorney a blank check and crossing his/her fingers hoping that the total fees are what he/she anticipated.  I know that if I was the client, I would definitely prefer the certainty of knowing the total cost instead of hoping for the best.

Specifically, I believe that clients receive the following benefits from hiring attorneys for a fixed fee:

• Clients know the total cost up front, which enables them to determine prior to retaining the attorney whether or not they can afford his/her services and to budget for the attorney's fees and costs. 
  
• Clients have another basis upon which to compare attorneys, both in the manner they charge for their services (fixed fee vs. hourly) as well as the amount charged ($X vs. $Y).
  
• Clients never end up in fee disputes with their attorneys, because all fees were negotiated and agreed upon before the representation began.
• This method encourages open communication from the client to the attorney.  In hourly billing situations, clients sometimes hesitate to provide information to the attorney because they know that they will incur fees and costs for doing so.
• Clients have a higher level of trust with their lawyers, which results in a better working relationship, which frequently yields better outcomes in the clients' cases.

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