Some law firms take only a narrow range of cases but other practices prefer the financial stability of diversification. Different cases are suited to different fee structures and it is important for law firms to choose attorney time and billing software able to handle all of the practice’s billing needs. Here are the billing models used by most lawyers.
Hourly Rates: Attorneys tend to like this arrangement because they know they are going to get an adequate fee regardless of the amount of work involved. It saves them from having to try to predict a fair price for what could be an unpredictable case. Although some time tracking software may allow lawyers to log their hours, billing software for lawyers adds an option for multiple rates. A firm might bill different rates based on who is doing the work–jobs done by a paralegal are going to cost the client far less than tasks performed by a senior attorney. Individual attorneys might charge different rates based on the matter or type of activity, and the billing software should be able to handle that easily.
Hourly Rates with Retainers: Clients are sometimes a little reluctant to part with their funds, especially after a case is decided. Many firms ensure they will be paid by collecting an upfront retainer. While the initial retainer is generally easy to collect, the firm needs to stay on top of the balance to be sure the funds don’t run out. The practice can’t simply stop working just because the retainer runs out and yet clients may need some time to raise enough money for an additional payment. Legal billing and accounting software tracks retainer funds and automatically notifies the firm when it is time to ask for an additional retainer from the client.
Fixed Fee: Although lawyers prefer hourly rates, clients prefer fixed fees. Clients fear being stuck with enormous bills and want to know how much the case is going to cost from the beginning. Simple cases such as will preparation or bankruptcy can often be done in this manner, since the work involved is predictable. Law firms want to protect themselves in the event the case turns out to be more complicated than they had thought, so they often include provisions in the agreement for the client to pay expenses or hourly rates in addition to the fixed fee for any unusual work or excessive consultations.
Contingency: Personal injury and debt collection practices often work on a percentage basis. If the case is decided in favor of the client then the firm using the time billing software reviews the matter expenses and deducts them from the settlement, and then takes a fixed percentage of the remainder as their fee. What is left goes to the client. If the case goes against the client, then the law office typically receives no payment.
Even if your firm uses a simple fee structure today, you still need the right attorney practice management software to give you more options when you expand your practice. Prepare for the future of your law firm by investing in dedicated legal software today.