Large law firms are slowly adapting to client demands for certainty over bill amounts. The lion?s share of legal work, however, continues to be billed by the hour – sometimes at unpredictable rates.
Pushing large firms to be more innovative are sole practitioners, such as Ridgedale Law Corp. principal Lisa Ridgedale, who are snagging business by targeting clients who want fixed fees.
Ridgedale recently left McMillan LLP to found her own firm. Part of her reason for leaving was because she did not believe that McMillan would be open to the flexible billing methods she now offers. Another was that she simply wanted to found her own practice.
?Wherever possible I will have a flexible fee arrangement,? Ridgedale told Business in Vancouver.
She estimated that 75% of her business will be billed either as a flat fee, a contingency fee – where she only makes money if the case is successful – or a success fee, which involves a low bill-by-the-hour rate plus a bonus if the result of the work is a win for the client.
?The point is to be flexible for each client, depending on what they want,? she said.
One situation where Ridgedale offers a fixed fee, as well as an option to pay by the hour, is if a client wants her to write letters to try to enforce a finders-fee agreement or other legal rights.
Ridgedale knows how long it takes her to write these letters, but the risk is that she does not know what the response to those letters is going to be like.
She may be embarking on a convoluted process where she winds up working extra hours for free; or quick responses may make light work, in which case the client would have been better off paying her by the hour.
The flat fee, however, gives both Ridgedale and her clients certainty about how much she will be paid.
McMillan?s office management partner, Karl Gustafson, said Ridgedale would have been free to explore alternate billing strategies had she approached the partners.
?We?re absolutely open to those kinds of billing arrangements and we?ve done them,? said Gustafson.
He believes fixed fees work best when the work is completing relatively basic tasks, and it is easy to predict the amount of work involved.
Trademark applications, for example, are one area where McMillan usually charges a set rate.
Fasken Martineau Dumoulin LLP managing partner William Westeringh said the trend of clients wanting more fixed fees stems from executives and in-house council having a set budget for necessary legal work.
It does not go over well to tell the CEO that they have no idea how big their legal bill will be, Westeringh said.
Approximately 30% of Fasken?s revenue comes from alternative billing.
In addition to all the alternative billing methods that Ridgedale champions, Fasken offers volume discounts for clients who spend more than $1 million on legal fees in a year.
It also offers a so-called ?blended rate? where some work may be done by an ultra-expensive senior lawyer, some by a seasoned lawyer and some by a junior lawyer. All work on the case would be billed at the same rate. ?
