Compensation Models
Moving Away From The Billable Hour
Today’s Objectives
• What are alternatives to the billable hour?
• How do potential clients determine value?
• Who is using alternative compensation schemes?
• How are alternatives being implemented by practitioners?
My Lens
• Justice Entrepreneurs Project - JEP
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Innovative
Entrepreneurial
Socially Conscious
Hungry
Willing to experiment
• People, aka potential clients
How Do Potential Clients Determine Value?
• Determining client value the most important step in the pricing
process
• Clients determine value just like we do
• Clients value different things
• What clients value does not align with the billable hour
What Do Clients Want?
• Solutions to their legal matter
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Counsel
Advocate
Navigator
Information Broker
Connector
• Results
What Else Do Clients Want?
• Price certainty
• Transparency
• Clear and concise communication
• Collaboration
• Convenience
• Flexibility and a variety of potential fee arrangements
Who is Using Alternatives to the
Billable Hour?
• Some big firms thanks in large part to the ACC Value Challenge
• Attorneys practicing in areas such as immigration, personal injury,
some real estate
• JEP attorneys
• Landlord tenant issues
• Transactional small business work
• Family law
JEP Attorneys – Landlord / Tenant
• Alternatives work on both sides
• Evictions
• Tenant• Fixed Fees
• Occasional contingency
• Landlord
• Fixed Fee
• Security Deposits
• Contingency
• Fee Shifting
JEP Attorneys - Transactional
• Discrete tasks, discrete fees
• Predictable negotiation
• Capped negotiation
• Open ended tasks, discrete fees
• Monthly general counsel
• Value if calculated by hourly rates
• Added value in long-term relationship, reliability, familiarity with business
JEP Attorneys – Family Law
• Uncontested – Flat Fee
• Mediation
• Contested – single issue
• Contested – multiple issues
• THINK IT THROUGH
• “Process Mapping”
• Collect information – prioritize, estimate, change
• No need to “do it all”
Using Limited Scope Representation
= More Options
• Provides moderate and low income clients with more options
• Increases an attorney’s potential client base
• Use non-legal words and concepts when explaining LSR to clients
• Be sure to know the rules in your state, have a good legal
representation agreement, and identify all potential legal issues with
the client
• LSR will not be a good fit for everyone
Fee Arrangement Matrix
Type
Description
Ideally Suited For
Fixed fee by task
Where an attorney charges a
specified sum for the completion of
a certain task associated with the
case.
Domestic relations (e.g.,
uncontested divorce, enforcement
of support or maintenance order,
enforcement of property
settlement or other judgment
provisions, modification of
parenting time), small business,
landlord/tenant, civil litigation . . .
most practice areas!
Fixed fee by phase
Where an attorney charges a
Landlord/tenant, domestic
specified sum for the completion of relations (all types of cases)
a certain phase associated with the
case.
In What Ways Can Alternative Billing Methods
be Expanded in the Personal Services Market?
• Fertile ground in many practice areas (e.g., domestic relations)
• Use limited scope representation
Getting Paid for Legal Services
• Keeping in mind as part of pricing strategy
• Crowd funding
What are Alternatives to the Billable Hour
• Fixed fee (by phase, task or case) • Hybrid
• Flat fee plus contingency (or reverse
• Recurring fixed fee
contingency
• Pure contingency
• Holdback
• Success fees
• Reverse contingency
• Fee arrangements using the
• Fee-shifting
billable hour
• Contract recurring fee
• Capped fees with shared savings
• Taking an interest in a client’s
• Collar fees
company