Domestic relations is an area of law where hybrid billing arrangements can promote greater efficiency and profitability. Family law clients appreciate the predictability of hybrid billing, and family law attorneys benefit from fewer unpaid bills and increased profits.
By Scott Classen, Marketing Director
Ever notice how many family lawyers advertise uncontested divorces for a flat fee? That’s because domestic relations is an area of law where attorneys can effectively implement alternative billing arrangements. Alternative billing has quickly gained widespread acceptance within the legal community, as increasing numbers of attorneys move away from the traditional billable hour. These legal professionals recognize the inefficiencies of the billable hour model when it comes to certain types of cases and practice areas.
Matters like uncontested divorces and settlement agreement drafts can be handled in such a routine manner that they perfectly lend themselves to fixed-fee billing arrangements. More complex matters, like those that may result in extensive litigation, are better suited to traditional hourly billing. But family lawyers do not have to always choose one option or the other. Hybrid billing combines two or more options to create an alternative billing arrangement that best meets the needs of the law firm, as well as the client.
Alternative Billing Options
When many attorneys hear the phrase “alternative billing arrangement,” their first thought is fixed fees, but there are numerous other options for law firm billing:
- Fixed Fee Billing – This predetermined amount is either paid upfront or in scheduled installments. Clients like this option because they know how much their legal services will cost, without surprises on the backend. With thoughtfully established fee amounts, attorneys benefit from greater efficiency and higher profit margins.
- Project-Based Billing – Overall matters are broken down into smaller separately billed projects. Clients pay an established amount as the firm completes each project. With this option, law firms face less risk of unpaid fees. It also offers greater flexibility, leaving room for a reevaluation of the case and fees as the matter progresses.
- Capped Fees – Under these arrangements, clients pay under the traditional hourly billing model until a pre-established cost limit is reached. Clients find comfort in knowing that their legal bill cannot go above a specific amount. When the cap is properly set, law firms experience greater profitability.
- Blended Rates – These blended hourly rates account for the attorney’s regular hourly rate, along with the lower rates of any paralegals and supporting staff members who perform tasks on the matter. Clients see these arrangements as a discounted hourly rate, which they appreciate. With sufficient planning and task distribution, law firms may actually see a greater return even with these lower hourly rates.
- Performance-Based Fees – Clients pay set fees based on predetermined measures of progress on the matter. Clients like this option because compensation corresponds with value received. Performance-based fees provide the law firm with an added incentive for quality work and greater efficiency.
Billing Family Law Matters
As family lawyers consider whether a hybrid billing option is appropriate, they should evaluate the time and tasks that the relevant practice area requires.
- Uncontested divorces – These matters are typically routine in nature. Family law attorneys often maintain templates for these cases and most jurisdictions offer streamlined processes to resolve them quickly. As such, family lawyers could comfortably handle uncontested divorces with a predetermined fix fee.
- Disputed Divorces – Unlike uncontested divorces, divorce disputes have numerous variables that affect how much time the matter requires. Most courts require that parties to a disputed divorce participate in at least one settlement conference. These cases may also require depositions and extensive litigation, which means numerous unforeseen hours. But this uncertainty can be effectively managed with a hybrid billing arrangement.
Family attorneys could charge flat fees for more predictable tasks, like drafting pleadings or sending interrogatories. They can then use capped fees or project-based arrangements to bill for the less predictable aspects of the matter, like negotiations and litigation.
- Separation agreements – If both parties agree on the specific terms, drafting a separation agreement can easily be accomplished with a flat fee. When parties don’t agree, negotiations may become necessary. Under a hybrid fee arrangement, family attorneys could still offer a flat fee, with stipulations that hourly billing will apply for negotiations.
- Custody and visitation disputes – Custody and visitation disputes typically require numerous court appearances, from temporary hearings to final litigation. So flat fees may not be the best option for these cases. However, family lawyers may choose to employ hybrid billing in order to provide the client with some peace of mind, while also ensuring adequate compensation for the firm.
Project-based billing, combined with fixed fees, can be an effective hybrid option for these types of cases. Family law attorneys could break the various steps into smaller projects and establish separate fixed fees for each phase. For example, preparation and appearance for the temporary hearing is billed as one project with a fixed fee paid upfront or at the conclusion of the hearing.
- Adoptions – Standard adoptions are generally well suited for flat fee billing because they typically follow a set process of tasks and one court appearance. However, should a biological parent contest the adoption or refuse the termination of their parental rights, a hybrid billing model may prove more effective. To implement hybrid billing, a family law attorney could bill a flat rate for filing the adoption petition and an hourly rate for the termination of rights process.
Domestic relations is an area of law where hybrid billing can promote greater efficiency and profitability. Family law clients appreciate the predictability of hybrid billing arrangements, and family law attorneys benefit from fewer unpaid bills and increased profits. When using hybrid billing options, family lawyers need a legal billing system like TimeSolv that streamlines the hybrid billing process and offers the reporting features needed to adequately plan for cases and establish proper fee arrangements.
Scott Clasen oversees all aspects of TimeSolv’s marketing efforts. With 20+ years of marketing experience, he has seen the full transition to the digital age. To learn more about automating your law firm tasks with TimeSolv, click here for a free trial: apps.timesolv.com/App/Registration
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I have been “value pricing” since 2005. I use it in all cases, whether hotly contested or not. The key is to analyze your practice and your cases to carefully assess fair pricing. I began this process after listening to an ABA Law Practice Management seminar on the subject, which led me to the writings of Ron Baker. I have read all of Baker’s books and am a member of his value pricing organization, The Verasage Insititute. I would welcome a dialogue with you on this topic.
Mark Chinn, Jackson, MS
Mark, you can contact me at email@example.com and we can set up a time to talk. Thanks!