There is a costing crisis currently afflicting law firms, and fixed fees could be a surprise solution.
There’s confusion about how to get paid for the work that you do without scaring off clients.
Many solicitors are playing it far too safe when it comes to reporting their billable hours.
Our research found that 50 per cent of lawyers bill between five to eight hours daily, but only ten per cent exceed nine to ten billable hours despite 85 per cent reporting working over eight hours daily.
Why are solicitors scared to charge for the work that they do, and how can this costing crisis be resolved?
Fixed fees could be the answer, but this is also a cause of concern for many solicitors.
We want you to be happy when you work, not constantly cowering over charging for the services you provide.
What is causing this costing crisis and are fixed fees the solution or is there a way to salvage billable hours?
Do billable hours work?
No.
Really?
It’s complicated.
Billable hours can work, but they’re certainly not working for the majority of law firms right now.
We’ve mentioned that our research is finding that billable hours are failing to capture the amount of work you actually do for clients, resulting in a lot of effort going unpaid.
The trouble is that clients might think you are overcharging for work when you use billable hours.
An article from the Journal of Forensic & Investigative Accounting found that “costs and overbilling are among the more common reasons for client dissatisfaction with law firms.”
This was made worse by clients struggling to understand the complexity of legal bills and becoming concerned that they are being overcharged.
The research determined that “hourly billing can provide an incentive for lawyers to bill too many hours for clients’ cases, which may have an adverse effect on staff ethics and open opportunities for billing fraud.”
When comparing this research side by side with hours, we end up in a bizarre position where solicitors are seemingly not billing for all the work they do and yet are being accused of overbilling for work they don’t do.
It’s a mess, and something needs to change.
Could Fixed Fees Be the Solution?
It might be, although many solicitors are probably hesitant to embrace it.
The biggest barrier to the adoption of fixed fee work is the fear that the actual work done would end up costing more than the price stated.
This would be if the work became more complex or tedious and ended up taking too much time.
Solicitors are rightly concerned that they would have to put in hours of unpaid work to meet deadlines and not pass those costs onto the client.
Keep in mind, that’s exactly what’s currently happening with billable hours.
Maybe fixed fee working is not going to open up as many new problems as solicitors fear it might.
As the research notes, fixed fee working means that “firms can reward productivity and efficiency” while providing the added benefit of being “transparent and easy for clients to understand.”
Technology Makes It Possible
That’s where Smokeball comes in.
Our legal practice management software helps law firms transition confidently to new pricing models – whether you prefer billable hours or fixed fees.
We know from our own research that many solicitors are missing revenue opportunities due to inefficient time tracking and workflow bottlenecks.
The automatic time tracking feature is vital for firms that want tighter control over their revenue, and who doesn’t want that?
If you want to make the jump to fixed fee working, the time tracker is useful in discovering how long it takes you to actually complete work and can allow you to set your prices accordingly.
Not convinced by fixed fees?
No problem, the time tracker will let those billable hours more accurately reflect the work you do.
No more unpaid out of hours work.
You can even switch between tasks, and the time tracker will automatically log this, so you don’t need to worry about starting and stopping a clock.
Whether you like billable hours or fixed fee working, the way that solicitors charge for their services needs to change.
Your time is valuable, and Smokeball is the key to getting the most out of the work you do.
Make work more professionally (and financially) rewarding. Book a demo today!
