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Small Firm Roadmap Stories: Ditching the Billable Hour

Lawyerist Lab is a community where solo and small-firm lawyers go to innovate, test, experiment, and improve their law businesses. We’re interviewing Lab members on their experiences as they align with The Small Firm Roadmap.

Jeff Houin, partner at Easterday Houin

I wanted to make sure the pricing, regardless of what the client used or didn’t use, was about the benefit — not the time it takes me to do it.

Tell us about your practice. How did it start? What were you doing before you started it?

Our firm is in rural Indiana. We have three attorneys. We cover a broad spectrum of practice areas. Since we’re in a small town, we like to provide all the legal needs our clients might need.

I joined in 2012, but the firm had been around for ages. At first, it was just my partner and me, then we added another attorney a few years ago. We plan to keep growing.

I was technically a solo my first year out of law school, sharing my office with a more established firm that gave me a lot of guidance. After that, I worked for a much larger firm that did real estate litigation. I covered the Northern third of Indiana! I mean, if there was a court hearing or appearance needed, I was the guy. And I came back around to smaller firms.

What made you go back to a smaller firm after your experience in a large firm?

Location, honestly. I now live and work in the town I grew up in. I tried to get away, but when my wife and I started having kids, we realized being closer to their grandparents was better for all of us. 

Also, I commuted for a long time when I was at the other firm and I realized I didn’t want to do that anymore. A small firm let me work and live in my community.

What’s different about a rural vs a bigger city practice?

The challenges are comparable — but the scale is so different. We do everything we would at a big firm and the challenges are similar, but we’ve had to think about how we scale for our rural community, including how we price our services.

So, what was the moment you decided to join Lawyerist Lab?

My partners and I followed Lawyerist for a long time — read the resources, listened to the podcast, the whole bit. And for a long time, we knew these were important lessons, but we thought we could still do everything on our own.

But at some point, I realized this wasn’t actually true. I wasn’t holding myself accountable. I was struggling to implement my ideas because there was too much to break down on my own. I really, really needed someone to say, “Here’s the process, and here’s your first step.”

I looked at a couple of different coaching options, but Lab was the one that broke everything down into the most manageable steps. I always know what my action steps are and what’s coming next. 

What do you find most helpful about Lab?

The coursework has been pretty valuable. As I mentioned, having a step-by-step process is invaluable to us, so having concrete steps I can reference at any time is a huge help.

The Masterminds are great. It’s always validating to hear other perspectives and get tips from other people who’ve been through what I’m doing.

What’s one area of the Scorecard where your firm is doing well? How are you maintaining that growth?

We’re scoring pretty well in Technology. Tech has always been a strength for our firm. We’re willing to adopt new tech and use it to make our practice more efficient and make our business run better. 

To implement, we start with the right mindset: We don’t adopt tech for tech’s sake. We’re not looking for the latest bells and whistles, or what looks the fanciest. We want tech that works within our existing workflows and gets the job done.

We’ve also been paperless since 2014. Other attorneys are speechless at how we can operate like this. I tell them I have one computer that is both my laptop and a tablet. And when I go to court, unless I have exhibits, I don’t take any paper files with me. It makes everything so much easier. 

Also, communication is key. New tech can be scary for people who aren’t used to it and there can be a reluctance to adopt. You can’t just change everything at once. Adoption has to be a gradual process of training, getting everyone on board, and helping them understand the benefits of the new tech. Having a clear roll-out plan is key.

We also have a pricing model that’s a little different from other firms we know. We use subscription pricing, which we launched at the beginning of 2019.

When we were looking at new pricing, we wanted something that really benefited clients. Billing by the hour meant clients were hesitant to contact me. They would think their question wasn’t important enough to get billed for, so they wouldn’t call. And I encountered situations where if I’d known their issue six months earlier, it wouldn’t have snowballed. We had to figure out a way to break down that barrier.

I wanted to make sure the pricing, regardless of what the client used or didn’t use, was about the benefit — not the time it takes me to do it.

So our model is a low flat monthly fee that keeps communication open. If clients have a question, they can call, email, or text me without worrying about how much it’s going to cost. If there are larger projects, then I’ll quote them a new price based on project pricing. 

This means fewer surprises. I always start with a roadmap session in the first meeting. Clients fill out a 50-question questionnaire so I know everything upfront. We decide on their priorities. I’m able to map out future project costs. And since they aren’t getting billed by the hour, they’re more willing to jump in and give me all the information I need. 

And the cost really evens out. In the first month, clients might call a lot. But as they get comfortable, they’re calling less.

Last question: What qualities does someone need to be a successful solo or small firm lawyer?

Mindfulness. Be intentional about your plan. Make sure you’ve thought through every decision: What are you trying to accomplish? What’s the plan? Why am I doing this? Taking time to plan your leap instead of jumping in will help you so much down the line.

Jeff joined the previous firm, Easterday & Ummel, as an associate attorney in April 2012 after working for larger law firms in South Bend and Indianapolis. Jeff earned a bachelor’s degree from Ball State University in 2000 and began a successful career in sales and management. After several years in the business world, Jeff returned to school to get his JD from the University of Notre Dame Law School in 2008. At Notre Dame, Jeff served as an Executive Articles Editor for the Journal of College and University Law and competed as a member of the Moot Court Showcase Team. Jim and Jeff formed Easterday Houin LLP on January 1, 2015.

Lawyer Hourly Rate Calculator

Figuring out what to charge is hard when you are just starting out. It is made harder by bar associations, which are wary of allowing any discussion of fees on their discussion lists. (This is primarily due to Goldfarb v. Virginia State Bar, in which the Supreme Court found the Fairfax County Bar Association’s minimum-fee schedule for title examinations constituted illegal price-fixing.) But whether or not you are going to charge hourly rates, you need to know what your time is worth.

You can get a feel for the going rates in your town by asking other lawyers what they charge, but I think it is better to start from your bottom line: what do you need to make, and what hourly rate will get you there. If the market will bear a higher price, great! But if the going rate is lower than you need, you might need to go back and work on your business plan.

To find out the hourly rate you need to charge, use this calculator.

About This Calculator

If you want to know how we arrived at that hourly rate, here’s the equation:

( ( Income / .7 ) + ( Expenses * 12 ) ) / ( ( Hours / 5 / 3 ) * 241 )

In other words, first, we are putting your taxes back in, using 30% as a rough estimate of your tax rate. Then we add expenses. That works out to the total amount of money you need to make in a year, which we divide by the number of hours you want to work in the workdays available in a year (365 days minus 2 weeks for vacation, 100 days for weekends, and 10 federal holidays equals 241 workdays.) divided by three. We divide by three because you have three jobs: lawyering, marketing, and business administration, and each of them take about the same amount of time. In other words, you can only bill about one-third of your time.

This is a rough estimate of the hourly rate you need to charge, obviously. But it’s also a fairly conservative estimate. If you do need to take home the amount you enter in the first box, you really shouldn’t try to bill less than the result you get. The numbers won’t add up.

What to Do if Your Rate Seems Low

Let’s say you’ve been asking around, and most lawyers with your skill level are billing out at $250, but the calculator says you only need to bill yourself out at about $125 to hit your revenue target. You could just bump your rate to $250 in order to go with the market, and just work less. Of course, then you will be competing for the same clients like everyone else billing at that level.

What you should also consider, if your rate seems way lower than what you’ve learned from asking around, is that you might be able to market to a relatively untapped client base. The access-to-justice gap is huge, and if you can charge half the going rate and still meet your income target, why not give it a try? You might have an easier time getting clients that way.