November 06, 2011
Lawyering: Why not invoice some hourly work promptly every 2 weeks?
Sound ideas: Julie McGuire
Billing twice a month keeps the client attuned in real-time to the actual economic demands of the project--and helps the client plan.
Real time billing: invoice the client promptly twice a month. Like everyone else, we expect the "future of law" to include different billing alternatives. However, by that we mean the following: billing the same client different ways depending on the difficulty and intensity of the work.
Generally, we see in the future more flat fees for "commodity" work. And we believe hourly rates will continue to dominate for complex and novel projects--particularly where the relationships are longstanding and solid between in-house departments and outside law firms.
Case-by-case judgments about "value"--not hours, flat fees, or hybrids--will drive most engagements.
One idea comes from our Pittsburgh partner and co-founder Julie McGuire, who does transactional and corporate tax work globally, and it seems to work especially well for intense or "fast-moving" projects--and when you are billing by the hour. Julie's done this successfully for transactional work, and some arbitrations, for years.
It's simple. If a new or existing client has litigation or a transaction which is particularly intense and time-consuming--especially in the initial stages--depart from your fee agreement or usual practice with that client and at least temporarily invoice the client every two weeks.
(That means you can't wait long to get the bills out, though. Give yourself three business days tops.)
Obviously, you should check with the client and get permission. But you are not likely to get shot down.
Even a gung-ho sophisticated corporate client or GC you've serviced for years--which if accustomed to seeing over and over again monthly bills for day-to-day work in the, say, $15,000 to $30,000 range--experiences a kind of sticker shock when the bill goes suddenly to $30,000, $60,000 or much higher, even if it's only for a short time. The "jump"--no matter what numbers are involved--triggers a reaction.
Billing twice a month does two things: (1) keeps the client more attuned in real-time to the actual economic demands of the project (and lets the client plan) and, (2) assuming that the GC or other client rep is seeing work descriptions on bills that show value, effort and the range of things necessary to perform the litigation or deal, the details and intensity of the work are more "present-to-mind", better understood and more fully appreciated.
In other words, the invoice becomes more of a tool to impart a running report on what you and the client are doing together--and a better picture of your real value to the client on that project.
(from past posts)
Posted by Holden Oliver (Kitzbühel Desk) at November 6, 2011 12:59 AM