Flat(tery) Will Get You Everywhere: How to Construct Law Firm Flat Fees

Especially with the persistent and continuing use of artificial intelligence by lawyers, attorneys utilizing traditional, hourly billing models have sweatier palms than usual.  The elephant in the room posits the following question: If attorneys are getting more efficient using AI, doesn’t that mean that there are fewer hours for lawyers to bill? 

 

Yes, that’s correct, Jumbo. 

 

So, what now?  Well, one option is to keep doing what you’re doing, and pray.  (Perhaps, not valid.)  Then, there’s the alternative to generate more work, such that the same amount of hours can be billed, only with more clients.  But, that’s also a function of how efficient you become.  If the use of AI makes you 10 times faster (not unreasonable), are you going to increase your client load by 10x – that seems almost unfathomable, in consideration of how much time, effort and money it would then take, to make the same amount of total revenue. 

 

The only conceivable outlet, it seems, would be to change the way the law firm bills. 

One of the simplest conversions from billing by the hour, is to move to flat fee billing – that’s, in part, because it’s not all that different from hourly billing, when you get right down to it.   

 

The simplest method for creating a flat fee billing model, is to start by breaking down your case types/service offerings into projects.  Once you have your projects laid out, you can identify how many hours you’ve typically put into that work, to get a roundabout sense of the traditional charge.  After that, you can start thinking about value escalators, to arrive at a final number for a project price – those attributes could include your experience, acumen, firm resources, speed of production, accuracy of results, and number of successful prior projects, among other things. 

 

Once you have project values identified, you can build your flat fee pricing sheet, and even beta test it with some trusted clients, before launching it into the wild. 

 

The good news is that, in my experience, law firms utilizing flat fee or subscription models tend to make 15%-30% more, than through traditional billing programs. 

 

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