The traditional billing model has been for attorneys to bill by the hour. This model is in widespread use and barring a few exceptions, constitutes the default billing model. Very simply, it means attorneys charge an hourly rate and that hour rate is usually divided up into units (ten units of six minutes being most common). It is a relatively straightforward billing model and a lucrative one at that. The problem with this model is that it is not cost effective for clients and it basically means that the sky is the limit as far as legal costs are concerned. This billing model contributes substantially to the high cost of legal services and because clients have become accustomed to paying fees on this basis and because the firms that use this billing model profit handsomely from it, there is has been little incentive to revisit this billing model.
We are in the process of reviewing and altering our billing model because we recognise that the very prospective clients we would like to serve are often very reluctant to instruct attorneys because of the high cost of legal services involved. As part of our initiative to make quality legal services available to our clients and to prospective clients, we have made a few changes to our billing structure. We will no longer be charging for certain basic expenses such as telephone calls, photocopies (within reason), faxes and certain of our travel costs. These costs are covered by our usual fees.
Another aspect of our review of our billing model involves a review of alternatives to the hourly billing model. These alternatives include flat fees; variations of a contingency fee (contingency fees are regulated in South Africa, largely by an act of parliament); a ‘blended’ fee arrangements and even budgeted fees. For an outline of these alternatives, take a look at this article posted on the Missouri Bar’s website. For us this review is not about finding more ways to bill more money but rather finding ways to align our billing model with the value we add. This notion of a ‘value add’ is used frequently, so much so that it has started to lose its meaning. It is, however, our intention to put our money where our mouths are and bill more in line with the degree to which our services have real value to our clients.
For the time being we will explore ways to ‘blend’ an hourly fee structure with a flat fee structure in a way that makes sense both to our clients and for us. Watch this space!