True confession: I’m a happy lawyer. I know, I know, those are hard to find. Admittedly, it wasn’t always this way. I spent my first five years in practice struggling financially under the weight of the broken hourly-fee billing model inherited from our forefathers. As a result, I was broke, frustrated and on the verge of giving up.
So what changed?
It all goes back to last May. I was almost a year out of personal bankruptcy at this point. I had discharged a mountain of debt, been humbled, but still lived in constant fear of not being able to make ends meat every month. I billed out at $250/hour and took on many projects using “value billing,” yet my income was not consistent, predictable or secure. Because of this, I couldn’t plan. Nor could I hire an assistant to help me be more productive because I was afraid I would have to let that person go the next month. I was miserable, so miserable that I even considered getting a J-O-B.
I know many of you are in the same position right now.
And perhaps falling back on big law may be a legitimate option for you, but understand, I am not employable. I HATE working for other people. It crushes my spirit, and I value my time with my wife and kids too much to trade my life, and theirs, for a few bucks.
Not to mention, we are all lawyers here. A law degree can get you many things, but at a bare minimum it should give you options. As lawyers, you and I should not be forced into a career path we hate in the name of “getting by”. On that premise I knew there had to be a better way.
So last May, I received encouragement to try some form of a flat monthly fee billing arrangement. Like anyone else new to the concept, I had the normal fears and questions. Wouldn’t I be leaving money on the table? What if someone called all the time and sucked all my time into a rat-hole of unprofitability? What if I did a bunch of work upfront and the client canceled the contract? What if? What if? What if?
Yet clearly my way of doing things wasn’t working and I had nothing more to lose in trying something new. So it was last May, in that moment of boldness that I crafted a matrix of flat-fee service packages and committed to giving it a shot.
The end result? During the last two weeks of May 2009 I had six clients sign up for year-long flat monthly fee engagements at levels ranging from $250/month up to $750/month. The course of my life changed in that two-week span.
My office overhead was covered for an entire year. I could sleep again. And best of all, at the end of those two weeks, I could look at an Excel spreadsheet and start to plan without laughing at myself for making up the top-line numbers out of hope and desperation alone.
Yet it didn’t stop there. Today I enjoy a thriving practice that meets all of my wants and needs (personally and professionally). I have revenue on my books each month before I take a single new client. I hired an assistant to handle scheduling, and a full-time associate to handle drafting, which gives me more time to focus on engaging and counseling clients–by far my favorite part of the job.
I can now take time off without worrying about missing billable hours. I can have a meeting with clients that does not feel rushed or bound to a time clock. I can now say “no” to clients that don’t feel right, and I can say “yes” to clients who are onto something powerful and don’t have the money to pay me right now. I’ve hired the help I need and feel good that I’ve been able to give people jobs they love and from which they can learn a great deal.
So what can you do to experience the same level of freedom in your small or solo practice? Here are a few quick “nuggets” I’ve picked up along the way:
- Don’t be afraid to step outside the box- Fear almost held me back from making the best decision in the history of my practice. You cannot keep trading dollars for hours and expect to get ahead. It is just not possible, or feasible for your business.
- Hourly billing is NOT an option- When I finally made the shift to flat-fee billing, I took hourly billing off the table. It was not an option for my clients, and because of that, they never missed it.
- Variety is key- For best results, create a variety of flat-fee options from which your prospects can choose. Popular levels include $250 per month, $750 per month and $1500 per month packages. It’s a psychological ice-breaker but it also helps your clients feel part of the process in choosing a custom package to meet their unique and particular needs. Use those plans as guidelines for engagements, not checklists. Follow your gut and always be in a position of providing more value than promised.
(photo: Eversheds LLP)