If you knew you would earn more money with a flat fee than an hourly rate, would you switch? 

There are lots of good reasons to make the switch, like:

• Clients like the predictability and price certainty, 
• Flat fees align the lawyer's and client's interests around results rather than time, and
• Lawyers are incentivized to work efficiently and effectively rather than to maximize billable hours, increasing overall productivity and profitability.

But when we asked all the lawyers who attended our pricing webinar last month what was holding them back from implementing flat fees, they were almost unanimous: fear of losing money. They did not think they could set accurate fees that would compensate them fairly for the effort they’d be putting in. 

This week’s tip: Use your historical data to accurately estimate the time and resources that will be required, so you can set more accurate flat fees. 

Getting started with flat-fees

Your existing data will provide you with a scope and an initial pricing framework for your new flat fees. 

Start with a matter type or service you do often and review past files to determine the amount you billed for that service. Don’t stop at one or two, gather as much historical data as possible so your flat fee will be accurate. 

Once you’ve gathered your records, determine the following things: 

1. What is the average you billed for that service?
2. What is the most you billed and why was the bill higher in those files?
3. What was the least amount you billed and why was the bill lower in those files?

With this information, break the matter down into discrete tasks and ask yourself, what tasks do you do every single time you deliver this service, that is, what is your baseline? What have you charged historically for that baseline service? 

Then ask yourself what additional tasks are you often asked to do, and what types of variations can arise. Use your historical data and determine how each of these has impacted your bills.

You should have all of this information in your records. It will take you time to review your historical data, but it is absolutely worth the effort. You will be able to develop an accurate scope and fee for the baseline service plus a list of factors that will affect the final fee. 

All of this information will help you set up your first flat fee. The next step is to try it out. You may not get it right the first time but your fees are not set in stone. Determine where you went wrong, adjust your scope and your fee, and try again.

To learn more about implementing flat fees without worrying about losing money, check out the recording of last month’s webinar, Fearless Flat Fees. You’ll hear from us and our partners at AltFee and see their pricing platform in action.

When you use your existing data to ground your flat fee strategy, you can set yourself up for success. Then, over time, you can refine your fee structure and be confident that you’re setting fees that are fair, competitive, value-based, and profitable.