Which Is Better: Hourly Or Flat Fee Billing?

Although it varies based on legal specialty, traditionally attorneys work according to the billable hour. However lately there has been a growing trend to move towards flat fee billing. CosmoLex time and billing software can handle either model, as well as contingency billing, but which billing is right for your practice?

Fitting The Price To The Job

When you charge an hourly rate you know the final invoice will match the work done. If the case turns out to be particularly hard or easy, your fee will adjust automatically. Unfortunately it can also mean an unpleasant surprise for a client if the cost is higher than expected. Flat fees ensure both you and the client know what to expect going in.

Cutting Corners

One problem with hourly rates is the client might start nitpicking every minute you spend. “Two hours to get that deposition? Shouldn’t you have been able to do that in thirty minutes? And I’m sure that phone call we had was ten minutes tops, not the forty-five you are billing me.” You can produce itemized invoices with your law firm billing software but that’s not going to stop some clients from nickel-and-diming each charge.

Sticker Shock

If you tell a client you can take a case for $1,000, the client is happy. But if you say the matter will take five hours at $200/hour then the client pitches a fit. Who charges $200/hour? I make a fraction of that in my job. What’s wrong with you, you shyster? They lose sight of the actual cost of the case.

Estimation Problems

One of the biggest problems attorneys face with flat fees is determining what they should be. Even experienced lawyers can have trouble guessing how many hours any but the simplest matters will take, and new attorneys feel like they are rolling dice to make their estimates. One advantage of using the CosmoLex law office billing program is that you can still track hours and expenses as unbillable even on flat fee cases so you can determine if you are charging an appropriate rate. You may not get it right the first time, but you can tweak your fees as you learn to make better estimates.

CosmoLex allows you to control your billing model. You can bill hourly for some matters, flat for others, or a combination of both to account for unexpected complications. Experiment with CosmoLex to find the right billing system for your practice.

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