Alternatives to the billable hour

Issue April 2010

by Bill Archambeault

Describing the "billable hour" as "soul-crushing," attorney Jay Shepherd told a room of lawyers that his employment law firm, Shepherd Law Group PC in Boston, stopped billing by the hour in 2006. Clients appreciate knowing what representation will cost them, and he doesn't have to worry about keeping track of hours or employees' timesheets.

"You'll make a lot more money doing this, you'll be a lot happier, and your clients will be a lot happier," Shepherd said.

Clients often don't mind paying more because they're able to budget for the cost. Figuring out what to charge may take some effort, and prices may need to be adjusted, he said, but a firm will eventually come out ahead.

"You have to figure out the value of what you do," he said. "Consider your competitors, but don't just parrot what they're doing."

He dismissed lawyers' concerns that there are "variables" to consider.

"Our costs are fixed. It has nothing to do with costs," he said. "Clients don't care about costs, they care about prices."

He cautioned against trying halfway measures like hybrid billing, blended rates and caps. Shepherd convinced at least one audience member.

"I'm going to try it, and Jay has given me the courage. It's a scary thing. The clients will be able to budget for it. I tried it once before and the client was thrilled and I was paid much more," said Richard M. Stone, a Boston attorney who chairs the MBA's State Tax Practice Group. "So for that alone, the conference has been worth it."