Alternative Billing

Internet Law Article by the Northern Express

I’m an internet lawyer by trade who loves to blog about innovative business models for law.  I was recently interviewed by the Northern Express on a variety of different issues ranging from the technical aspects of internet law, what it means to be an internet lawyer as well as how I ended up in Traverse City, Michigan founding the law firm called Traverse Legal, PLC

I’ve been blogging for over seven years about the law, use of technology by lawyers and alternative billing arrangements with clients.  This article is a great summary of how I got started and where I am today. You can read the article on "Internet Law" at the Northern Express.

Was Katie Billing by the Hour?

Baby As I kept a watchful eye on my iPhone as my partner Brian’s wife Katie started into her 36th hour of labor, I felt a twinge of concern.  “How is she handling all that labor?”  “How is Brian holding up through all those contractions?”

And then it occurred to me.  I quickly picked up my iPhone and sent Brian a text.  “Are you sure Katie is not billing by the hour?” 

I laughed to myself raptured in my own wit.  The more I thought about it, the more I laughed.  In many ways, practicing law to a set of minimum hourly billings is like endless labor.  You and your client endure the pain of it.  But the baby never seems to come. 

Congratulations to Brian and Katie who welcome a beautiful little girl into the Traverse Legal Family!

Big Law Firm Set to Review Client Base & Set New Client Minimum Billing Threshold of $200,000 a Year

In a recent article on WiredGC, John Wallbillich reports on a recent report on that the global law firm DLA Piper has set out to require minimum annual legal spends by its clients in order to have access to the firms legal services.  Existing clients will be dropped sometime in the future if they fail to meet the prescribed minimums. 

It is hoped the move... will help reduce conflicts where the firm has been prevented from taking on large instructions after previously accepting smaller mandates.

The firm will also assess all existing clients over the next three years to ascertain which companies it should target for more work and which it should consider dropping.

Wallbillich provides several thoughts on this new global framework below:

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Chicago, IL: The Midwestern Law Firm Management Conference

Midwestern Law Firm Management Conference I will be speaking at the Midwestern Law Firm Management Conference which is being held at the The Chicago Bar Association, 321 South Plymouth Court, Chicago, IL on September 21, 2010.  The program runs from 9:00 AM to 4:00 PM.  Larry Bodine will be moderating a panel of speakers on business development in a West Legal Ed program titled “The New Norm: Understanding How to Thrive in the New Economy.”  Other key speakers include Fredric D. Tannenbaum, Managing Partner, Gould & Ratner, Chicago, IL; and Kevin Thompson, Partner, Davis McGrath, Chicago, IL.  If you know you’re going to be in the area and would like to attend, please register here.

Here are a few of the key topics for discussion at the conference:

  • Learn the best practices of successful law firms and how to increase revenues in a tough economy
  • Take steps to position your firm for future growth and success
  • Integrate the top talent leaving major law firms into your practice
  • Create a viable succession plan
  • Protect your equity interest in the firm 
  • Make sure your firm succeeds after a rainmaker departs 
  • Learn how to protect client interests 
  • Meet and network with colleagues and potential clients 
  • Ensure that you comply with state bar

Conference Information:

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All-Time Worst Lawyer Billing Practices

How Much? As you all know, I’m not much of a fan of hourly billing.  Sometimes, we do it in litigation as part of a blended arrangement where we share risk with the client.  This can either be a flat fee cap or a contingency fee component to hourly work.  But a story I heard from a client the other day got me thinking.   What are the worst billing practices used by lawyers?  Here’s my list:
  • Calling a client who doesn’t have a live project to find out how they or their company are doing and then sending a bill to the client for the time spent on the phone.
  • Offering to pay for a lunch with the client and then sticking that as a “cost” item on the bill.
  • Billing time that doesn’t add any value to the matter.
  • Billing for cover letters which contain no substance or analysis.
  • Billing the client time when they question the bill.
Come on.  You can do it.  Give me some additions to the list.  I know you have them!

Navigating the Sometimes Tricky Waters of Client Relationships

The relationship between attorney and client is one of the most complex business relationships across all professions.  The high duty that lawyers owe their clients requires them to put the clients' interest first.  Yes, this means putting their clients' interest ahead of their own interest, even when it comes to payment. 

I'm always amazed by the collection tactics of most law firms.  The primary weapons tend to be past due notices, strongly worded letters, and -- worst of all -- leverage.  Now, attorneys aren't supposed to wheel leverage against their clients, but the issue of payment complicates matters sometimes.  Lawyers too often use their position of strength over their clients to get paid. 

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Is it the End for BigLaw or a Beginning for Change?

At a two-day conference hosted by the Georgetown Center for the Study of the Legal Profession called Law Firm Evolution: Brave New World or Business as Usual?, scholars, consultants, attorneys and law firms gathered together in debate and discussion over the future of BigLaw and its need for change. 

Here are a few excerpts from “Warnings Toll for BigLaw Firms Resistant to Change” by Rachel M. Zahorsky on the ABAJournal:

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Innovative Lawyer Patrick Lamb Discusses The Inevitable Movement Towards Alternative Fees

Patrick-Lamb Patrick Lamb is a well known Chicago lawyer, who has put his money where his mouth is when it comes to new business models for law firms.  Patrick's firm, Valorem Law Group, offers options for clients in the areas of alternative ("value") billing and technology. 

Read or listen to the interview below.  My Favorite Quotes:

  • ... the thing about alternative fees is that they’re shifting the financial risk to the firm, and so firms should be looking for ways to do things even more efficiently than they did before when they were doing things under an hourly basis.
  • from client’s standpoint, one of the huge advantages is the predictability of costs.  If you quote an alternative fee, we’ll do x amount of work for $10,000 or we’ll handle this case for $10,000, the client knows that that’s what it’s going to cost.
  • There’s a lot overhead that that firm’s clients are paying for ...  if you are working virtually or using technology in a cloud ... you can cut out a huge amount of that expense, and those savings can then passed along to the client.

Announcer:  Welcome to GAL Radio brought to you by the Greatest American Lawyer Blog.  Changing the way law is practiced through technology, innovation and creativity.  Turning the business of law on its head and shaking things up to the betterment of clients, lawyers, law firms and society.

Damien Allen:  Good afternoon, and welcome to GAL Radio.  My name is Damien Allen, and today we’re discussing alternative fee arrangements with Patrick Lamb.  Patrick is a partner with the Valorem Law Group, a Chicago litigation firm.  He joins us now via the telephone.  Good morning and welcome to the program, Patrick.

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Lawyers, Prospects and the Consultation Fee: Should Lawyers Charge a Prospective Client a Fee for an Initial Consultation

Ed Poll, the host of The Law Biz Forum - a legal forum for lawyers seeking best practices, wisdom and support - lists the following three choices lawyers have when it comes to charging prospective clients for an initial consultation in this December 11, 2009 forum post called “To charge or not to charge.”

The issue: whether to charge a prospective client a fee for an initial consultation, the meeting before being engaged. The wisdom of charging in this situation has long been debated, and it comes down to three fundamental choices:

    1. Free initial consultation
    2. Paid initial consultation at the lawyer's regular rate, exclusive of any subsequent engagement
    3. Paid initial consultation at the lawyer's regular rate, with the payment applied to the total bill if the consultation results in an engagement.

It should come as no surprise, of course, that there is no debate over whether or not to charge for an initial consultation at our law firm, we simply do not charge a fee.  We believe providing a free initial consultation creates value for our law firm in terms of retention, and lays a foundation for a healthy relationship with our clients. 

Where do you fall in line on this debate?