One of the many evils and pitfalls of hourly billing is our tendency to talk to clients about hours. Clients don’t care about hours. Clients don’t care about hourly bills. Clients will never understand and appreciate the hourly billing system. The uncertainty of the hourly billing method is a big part of this perception. When a client doesn’t know what the bill is going to be until it arrives, the client is almost always left with sticker shock and the anxiety which comes from the unknown.
We project monthly budgets for our clients and get their approval ahead of time. This removes the sticker shock factor. It also means that the client has already bought into a monthly spend before the month begins. Many projects in which we handle are purely on a flat fee. Thus, there is no sticker shock because the price was set up-front.
With any billing model, we as lawyers need to learn to talk value rather than budgets and time. Subjectively analyzing the value of your legal services for any particular client is critical. This process involves understanding the monetary and non-monetary benefits that would come as a result of your involvement in the client’s problem. While we often dabble in such discussions, lawyers need to learn to prioritize these issues in virtually every conversation with the client.
By talking "value" with the client at every opportunity, you not only create a set of expectations but reaffirm the value of the services that you are providing. The moment this conversation becomes difficult, is the moment you should realize that you may not be providing the value which makes sense from the client point of view. This is the same moment you should revisit the project with the client and discuss whether or not your involvement continues to make sense.
One of the real detriments of the hourly billing system is that it drives the focus and terminology of law firms. The entire culture of the firm becomes "hourly billing." This makes it extremely difficult to instill a culture which focuses on the value proposition to each and every client of the specific services which are being provided by your firm.