Hourly billing is dead. Long live hourly billing.


hourly billing or alternative legal feesLawyers haven’t always billed by the hour. In fact, it wasn’t that long ago that fixed fee schedules were mandatory in some states. Legal fees were regulated by state bar associations and everyone was required to charge the same amount for the same service.

Today, hourly billing is the norm but many attorneys advocate alternative fee arrangements. I’m one of them.

When you equate what you do with the amount of time it takes to do it you put artificial limits on your value, and your income. In contrast to the oft-quoted statement, lawyers have far more to sell than their time.

We sell our experience, our creativity, and our problem-solving abilities. We do more than write documents, argue, or negotiate, we save lives and preserve fortunes. We help the free world stay free.

Clients prefer fixed fees, too. They want to know how much it’s going to cost them to hire you. They want to know they won’t be giving you a blank check. Lawyers who offer alternatives to hourly billing are thriving.

Not everyone agrees. Some lawyers defend hourly billing. Maybe their clients are different.

I’m not an expert on alternative billing models, but I do know that the world’s highest paid attorneys, the ones who earn the equivalent of thousands of dollars per hour of work, don’t charge by the hour. Not if they’re honest, anyway.

Attorneys can begin to earn more (without working more) by embracing the idea that they have far more to sell than their time.

I’d like to hear from you. Do you use alternative fee arrangements? If not, why not? If so, how have you benefited?


“Could you take anything off your fee?”


An estate planner who does a lot of seminars asked about discounting fees, a subject that comes up quite frequently. His question and my response:

Q: About 20% of prospective clients ask if I can "take anything off" my fee. I have positioned myself as being a specialist who charges a bit more. I usually do take a few hundred dollars off so I don’t lose the client but I wonder is that smart or am I devaluing my services?

A: The answer is, simply, don’t do it. Most clients don’t shop fees and the ones who do you don’t need. Especially since you (correctly) position yourself as being worth more. You devalue your services and professionalism when you say yes to a request for a discount. Word will spread and before you know it, you’ll have people say, "I heard you gave Joe Jones a $300 discount, could I get that, too?" Before you know it, you’ll be giving everyone a discount, and then where are you?
At times, it’s okay to offer a discount, such as when you tie it to a "good cause" or as a closing tool at the end of a seminar, but NOT when they ask. Can you imagine asking your doctor for a discount?

The proper way to handle someone who asks for a lower fee is to let them know that if they can’t afford you, you would be happy to refer them to a lawyer who charges less. Watch, not one in 20 will go. But even if they all did (all 20% who ask), that’s okay, those are the ones you want to let go. Lawyers should continually prune the lowest 20% of their client base in favor of upgrading the quality of their clients and the fees they charge them.

Alternately, see if there are any services you could offer them "within their budget". If your complete package has A, B, and C components, you could offer them A and B for a lower fee; perhaps they can get C later.