The billable hour has been the core of the legal business model forever. Lawyers are evaluated not just on their skill or the quality of their work, but on their ability to maximize the time billed to clients each day. Every phone call. Every email. Every moment spent thinking about a case. It’s all supposed to be tracked and broken down into increments of six minutes. At the end of each billing period, clients get a nice little surprise when they open up an invoice and find out how much they’ve been charged. Unfortunately (or fortunately?), this business model is dying. It’s time for lawyers to stop nickel and diming clients and start providing real value to them. Here’s why lawyers should stop billing clients for calls and emails.
Law Is A Relationship Business
As an attorney, your relationships are your most valuable asset. The bigger your network is, the more clients and referrals you will get. You should be doing everything possible to build strong relationships with all the contacts in your network, and especially with your clients.
Client relationships in particular are based heavily on a foundation of trust. The more you can foster this trust, the more successful you will be at building up your client base.
The problem with hourly billing is that it becomes hard to trust someone who bills you every time you interact with them. It leaves a bad taste in your mouth when you find out you got charged $50 for a five sentence email answering one simple question.
Eventually, you start to wonder whether your lawyer really does have your best interests in mind, or whether their main objective is to find more time to add to your monthly bill.
Billing for time does not properly align the interests of the lawyer and the client.
The lawyer is interested in making money, which creates an incentive to bill excessively and work inefficiently. The client’s interests are just the opposite – to take care of their legal needs as quickly and affordably as possible.
As a result of the misalignment of interests, the client inevitably starts to feel frustrated that the work is taking so long and costing so much. They start to perceive less value in their relationship with you. And ultimately, they may actually end up foregoing some legal services that they really need because they don’t want to spend any more money.
This is not how you create trust or deliver client satisfaction, especially in today’s consumer driven world where client needs are starting to reshape the legal industry.
Excessive billing practices may help you earn marginally more fees per matter in the short term. But a client relationship can potentially be valuable for long into the future, especially when you factor in referrals. By over-billing, you are creating unnecessary friction in the relationship and reducing the value of your biggest asset.
Open Communication Eliminates Friction
The number one thing that will help you establish and maintain a high level of trust with your clients is communication.
You are their advisor. You are their counselor. You are the person they are trusting to help them navigate a very personal, scary, or complicated situation.
By making it very clear upfront that your clients can communicate with you openly, without feeling like you will bill them for every call, text, or email, you will establish a strong foundation of trust and create a long-lasting relationship that will benefit both the client and your firm into the future.
This doesn’t mean you can’t charge for consultations – in fact you probably should offer paid consultations as a service. But don’t create unnecessary friction in the relationship with your clients by billing them for everyday communication back and forth.
Making The Transition
If you find yourself thinking, “I’ve been billing this way for years. It’s a big part of my business!”, you probably aren’t alone.
Many lawyers feel pressure to constantly be billing. It’s deeply ingrained in the culture of the legal industry. Spending time on any activity that is not billed to a client is basically the equivalent of burning money.
But it might actually be hurting your business.
Today’s customers expect better service and more value for their money. The ways of the past won’t cut it anymore.
In fact, customer experience is becoming the single most important competitive differentiator, ahead of pricing, branding, marketing, and all of the other factors we normally think of when trying to differentiate ourselves from the competition.
By maintaining an open line of communication, where clients can interact with you freely to express their fears, questions, and concerns, you will create a much better client experience and foster a strong relationship that will encourage repeat business and increase referrals down the road.
It might feel like you’re giving up money in the short term, but the increases in client satisfaction will serve your practice very well over the long run.