Legal02 November, 2018

Law firm fee agreements - do you deliver value to clients?

When it comes to delivering distinctive, competitive client service, the first step is to establish a standard, professional client intake process. During this process, sufficient time should be allocated to discuss engagement and fee arrangements with clients. After all, clients want to have a ballpark idea of how much your services will cost as early as possible.

Traditionally, offering a reasonably reliable fee estimate to the client would require estimating the time that will likely be necessary to complete the given legal project (based on similar cases in the past), applying the hourly rate, and estimating the cost of staff time and expenses. However, as clients expect more value for money, delivering better service means being more responsive to clients about alternative fee arrangements (AFAs).

In this post, we'll give you some tips to address fee agreements and engagement so that you can address client needs, while keeping focus on profits.

Engagement and fee agreement: Are you delivering value?

While clients lead the way in asking for AFAs, a common misconception is that they are only interested in the concept to negotiate a discount. More than a question of savings, clients want cost predictably and transparency – two important levers that can greatly reduce misunderstandings and disputes over legal fees and costs.  Often billable hour models cause friction as clients focus on finishing matters as soon as possible, while firms are not incentivised to make operational efficiencies.

As more clients request AFAs, it’s up to the law firm to decide if they will use the opportunity to align interest and provide a quality service at a better price. While AFAs have the potential to make clients happy, law firms also need to ask themselves what they can accept and how they can make AFAs profitable. Compared to large law firms that are encumbered by overhead, solo and small firms are in a better position to be flexible and adapt to client expectations, but that doesn’t always translate to immediately initiating AFAs.

AFAs are still viewed as risky – though that has more to do with the lack of confidence law firms have in the data than anything else. An inability to predict how much a matte will cosrt prevents many from adopting AFAs.

How technology can help you gain confidence in AFAs

If you are using legal technology to track time and invoicing, the data you need to estimate the time necessary to complete a given legal project and the costs to deliver is available to you.

Using a full featured case management system can help you accelerate client engagement and provide you with insights to implement profitable fee models.

  • Look at past cases based on type of client or matter type to estimate costs
  • Identify routine activities that you may be able to offer as a fixed fee
  • Save time drafting engagement agreements with templates that standardise clauses
  • Offer e signatures to reduce the number of steps a client needs to take to sign

What’s more, if you are using systems that enable your firm to work faster (via document templates and workflow automation) and more collaboratively, you can boost efficiency and keep costs in line.

Want more actionable advice for meeting client expectations at different stages of the client service journey, while building a distinctive, competitive firm? In our latest white paper, we explore how technology can help you from client intake and fee arrangement, to case management and retention. By the end you will have a complete, end-to-end client service overview that will assist you in focusing on making improvements to your own firm, starting today. Get your copy here!

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