Do you offer flat fees for any of your legal services?

If you don’t, consider this: According to Clio’s 2022 Legal Trends Report, 67% of clients want flat fees but only about 37% of law firms offer them. It’s an opportunity crying out for action, especially as AI eats into the legal services industry (more on that later…read on).

When you sell time, you can only sell 24 hours in a day. Although some lawyers have tried to sell more, they usually get caught [LINK TO: https://abovethelaw.com/2022/11/reminder-billing-more-than-24-hours-in-a-day-is-a-pretty-obvious-red-flag/].

Hourly billing is selling time. With AI set to make a lot of legal work faster, you’re going to need a new billing model. In fact, that’s exactly what Thomson Reuters predicts in its latest report, “Future of Professionals Report: How AI is the Catalyst for Transforming Every Aspect of Work”. Flat fees allow you to bill clients for the value you deliver, not the time you spend doing it.

This week’s tip: The transition from traditional hourly rate billing to flat-fee billing is a strategic move that can increase profitability and position you for the future.

Not only does flat-fee billing give your clients price certainty and transparency, it allows you to highlight your unique expertise and align your fees with the value and outcomes you deliver to your clients. In short, it decouples your time from your value, allowing you to charge more for your services.

If your hourly rate is $400, but because of your expertise and your processes you can solve a client’s problem in 15 minutes, you shouldn’t be limited to charging only $100. By focusing on deliverables and outcomes rather than hours, you can justify premium pricing for your services.

Flat fees also shift the focus onto process efficiency and allocation of resources. Every efficiency gain translates directly into increased productivity and greater profitability as your margins increase on the work.

Flat fees make sense on so many levels, and yet, many lawyers hesitate.

They’re afraid they won’t make enough money on a flat fee, that they can’t estimate what a file will involve, that the matter will balloon, or that clients are more comfortable with hourly rates. We hear all the rationales. But there’s a solution.

Our partner, Altfee, offers an easy way to scope your services and design flat fees that work for your firm. We use the platform every time we price our own services, and we’ve built it into the intake workflow in our Ultimate Intake Package, because it allows your firm to provide quick and accurate fee estimates during the intake process.

Your Action Item: Get a copy of Altfee’s new whitepaper, The Future of Pricing in the Legal Industry: Embracing AI & Efficiency  and book a demo. Don’t forget to mention you heard about it from us! 

Transitioning to flat-fee billing presents a strategic opportunity for you to maximize your earnings. By focusing on efficiency and leveraging expertise, flat-fee billing will position your firm for greater profitability in the evolving legal landscape.

Join us next week for more on building a profitable and productive law practice.