Friday, September 27, 2013

Flat-fee billling and time-tracking still go together

More and more attorneys are using flat-fee billing and it's easy to see why: for the client, flat-fee billing brings cost containment and certainty, while for the attorney, it makes invoicing easier and eliminates the need for detailed time-tracking

Or does it?

The problem with not tracking time in flat-fee (and contingency) matters, of course, is an analytic one.  That is, how does an attorney know if they're earning an appropriate fee from the work?

Simply put, if they don't track time, they don't.

For example - an attorney quotes a fee of $1000 to a client to handle what seems to be a routine matter.  If that matter takes the attorney an hour or two, then that is a pretty nice hourly rate.  But what if the matter takes 10 hours?  20?  What if the client calls five times a day for a month?  Before you know it, the attorney could have been better off working in Starbucks.

Maybe there are situations where the experience, or lack of other work, justify the lower rate.  More likely, though, is that the attorney could have been better off working on other, more profitable, matters.  Or networking.  Or being with friends and family.

And that's the rub.  While attorneys are traditionally known for working long hours, more and more, given the low quality of life of the average attorney, are seeking ways to work smarter, not just harder.

Legal software that allows you to track your time and bill, such as Online Legal Software, give an attorney the ability to track their time easily at the click of a button.  So with little effort, the attorney can build a database to allow them to analyze how much time goes where and the profitability of the same.  It may become obvious that certain types of cases aren't worth doing.  It will certainly give the attorney the ability to better structure their fee plans to reflect reality: hybrid flat-fee structures, perhaps, or task-based billing.

Giving attorneys the tools they need to improve their life and their practice.  That's the real benefit of technology.

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