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Alternative Pricing Models [Guest Post]


We thank the team for this guest post.

For years, law firms have been using the billable hour to charge clients. Nowadays, however, charging your clients in this way can be a competitive disadvantage. To provide the best client experience and value, law firms are beginning to take advantage of alternative pricing models.

What You Need to Know about Alternative Pricing Models

Put simply, an alternative pricing model is an agreement that allows a law firm to accept compensation based on a structure that is different than hourly billing. These fee structures focus on being accessible for the client while remaining profitable for the firm. According to the American Bar Association:

Alternative billing should be based on what is fair and reasonable both to the client and the lawyer.

Law firms are finding that models such as fixed-fee models for complex legal matters, including litigation, are still profitable and much simpler for the client to handle.

Types of Alternative Pricing Models

There are various types of alternative pricing models available, including:

  • Flat-fee pricing. Charges are fixed for legal services such as litigation, contract drafting and most any other legal service your firm provides.
  • Percentage pricing. This pricing depends on the amount involved in the legal matter. You’ll receive a percentage of this amount in payment for your services.
  • Contingency fees. If you’re a personal injury lawyer, for example, fees can be collected contingent on success, based on the results of the case.
  • Hybrid hourly and fixed. In this hybrid model, charges for contract or document preparation are fixed while meetings are charged on an hourly basis.

The Benefits of Using Alternative Pricing Models

Alternative pricing models can improve your firm in many different ways. Some of the benefits of these models include:

  • Greater reach. Offering alternative pricing models opens your firm up to a wider client base that otherwise could not afford that hourly cost up front.
  • Profitability. Firms that take advantage of alternative pricing models see a greater profitability thanks in part to greater reach and in part to offering an improved client experience for current clients.
  • Clear focus. For your clients, it’s easier to focus on the benefit of your services, versus the tick of the clock. Plus, these models clear up the confusion that comes from the question: what counts as billable time?

The key is this: the billable hour simply measures time, not the value of your legal services. To provide the value your clients crave, the service you provide should overshadow the cost. And to do that effectively, your law firm should adopt an alternative pricing model that works best for both you and your client.

Want to Improve More than Your Firm’s Pricing Model?

Alternative pricing models are just the beginning of the improvements you can make to take your law firm to the next level. To discover where your firm could improve, take the Lawyerist Small Firm Scorecard assessment to find out.