Blawg Review #107
Portable Digital Dictation Changes Everything

Value Billing is not Discount Billing.

There is a mistaken belief that value billing is somehow discount billing. This discourages lawyers from experimenting with value billing.

Let me make this clear. Value billing is not discount billing. For clients that want the cheapest solution, our firm is not the answer. Quite the contrary. Because we are so focused on defining and providing value to the client, we tend to do more work on the front-end of every case. We figure the case out by assessing the client’s goals and defining outcomes. That takes time and effort.

More importantly, we are not limited to our hourly rate in billing the client. Let me give you an example.

We were working with a client that is enduring unfair practices by a direct competitor. The competitor is making serious misrepresentations concerning our client and its product in the market.

In assessing the matter, we determined that the loss of a single customer could result in a loss of $100,000 or more in revenue. The client needs to be compensated for prior unfair practices as well as be compensated for damages to date.

Many lawyers would simply agree to draft a threat letter and bill us on an hourly basis. That summary process might be something in the range of $3,000.

Our assessment determined that the client’s goals are best met by an extremely aggressive stance including a threat letter and filing of a complaint. We have defined the exact outcomes on the front-end. We wake up each day focused purely on achieving those outcomes.

The initial budget for the client $5,000 a month for three months in order to achieve the defined goals. Suffice it to say that the goals are ones which are achievable as long as we execute our plan and do so skillfully. The value of the outcomes to the client far exceed the $15,000 spend. The client doesn’t care how much time we spend on the matter. The client only cares on us obtaining the defined goals. The client fully understands the financial value (impact on gross revenue) by obtaining these goals.

Value billing is not discount billing in the above example. Instead of simply going through the motions of the "traditional" threat letter campaign, we devised a plan which provides far more value to the client because the odds of achieving the defined benchmarks are extremely high. Most threat letter campaigns simply provoke litigation. How does that provide value to the client?

As a firm, we have an opportunity to earn more than an hourly rate if we are smart and efficient.

Value billing means exactly that. We define value to the client. We bill for the value provided.

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