The Future of charging legal fees is...increased sophistication and increased profit

Something to ponder under your particular "palm tree" enjoying a well-earned rest this holiday season...

The seemingly never-ending babble of attack on the Profession in relation to charging by the hour has caused lots of discussion within firms and within Law Societies and Institutes...

Some of the commentary suggests that lawyers cling to the billable hour because there are no simple alternatives...as if simple must necessarily be better!

Worryingly some of the commentary also draws the illogical conclusion that charging by the hour puts unreasonable pressure on young lawyers to reach targets!!!

Note that nothing herein suggests you should not be tracking all your activity accurately....activity capture is not charging by the hour or time-billing!

Clearly how you charge different types of clients for different types of services should be flexible and imaginative...and the happily almost-complete demise of Scales has been a valuable impetus in this change for the better...

Your main and over-riding concern these days is that however you charge still needs to be fair and reasonable...and clearly what is fair and reasonable will depend upon all the circumstances of each and every situation...

Let's be blunt about this...simply charging by the hour can be a sure-fire way to shoot yourself in the foot in terms of profitability...

It can shut you out of many opportunities to charge fair and reasonable fees that are far higher and deliver more profit...

Great disclosure within your engagement management regime is the key to getting paid in full on time, but also to determining after the event what's fair and reasonable in the miniscule percentage of matters where there's a problem you can't sort out yourself...

This is especially important for clients with some sophistication...

Fixed fees, fixed fees with "strike rock" clauses, periodic retainer, hourly rates with fees cap, hourly rates with skill, care and consideration factors overlaid (with or without percentage caps), conditional fees, fixed fees for parts of a matter and other charging methods for the balance...essentially anything goes provided you disclose effectively and get informed consent...it will be helpful when Costs Assessors get uniformly up to speed with the "future of the present"!

...and none of the wonderful opportunities to charge with more imagination puts any extra pressure on young lawyers to do a decent day's work for a decent day's pay!

Ponder this...two successful women in private practice...same age, experience and skills, same area of law, with sophisticated clients.

One has chosen to work in a major city CBD in a glass-walled, marble-floored tower..the other prefers the flexibility of the home/mobile office in the leafy suburbs. 

Arguably one has lower costs...

Does this mean that the hourly rate of our lifestyle-enhanced legal professional has to be lower than her CBD-based sister...what is a reasonable margin...does "fair and reasonable" still include such a nonsense in a time when most of the rest our world operates on a decidedly market-driven playing field?

That she may choose to have a lower rate for a variety of reasons, including perceived competitive advantage, is another matter altogether...does she have to?

You might imagine that I certainly think not!