Alisa Parenti
Lawyers are changing the way they bill their clients. I’m Alisa Parenti, coming up in Money Markets and More we’ll talk with estate planning and asset protection attorney Eido Walny right after this.
Alisa Parenti
We’re talking with Eido Walny, a lawyer in Wisconsin about a growing trend he’s seen in the legal field all across the country and that’s a move away from lawyers keeping track of billable hours and instead giving their clients a flat rate for different legal services. So Eido tell us how this works.
Eido Walny
One of the hardest things for estate, really for attorneys in general is keeping track of their time, spending a lot of time doing that, and then having to justify the time that they spent to their client as a means of billing them. Part of the problems that that creates is a barrier of communication between the attorney and the client. and one of the things that flat fee billing allows is for better communication between the attorney and the client because we don’t have to worry about the sense of the hourglass every time there’s a call or question or an email. I think as the relationship between the attorney and the client has gotten more and more important as competition in the marketplace increased attorneys are looking for better ways to enhance their business increase their relationships with the client and really build that relationship for the future and flat fee billing has been really one of the better alternative billing methods that’s developed.
Alisa Parenti
Are you seeing it increasingly across the country?
Eido Walny
One of the nice things about my practice and that I have the opportunity to work with clients literally from coast to coast and I see the trends developing first on the east coast then making its way over to the west coast and the finally over to the Midwest but I see this coming together everywhere.
Alisa Parenti
It sounds like from what you were saying earlier is that the customer’s may actually benefit as well from this change. Sometimes when there’s changes in pricing structure people tend to say wait a minute, am I going to be paying more but you seem to think then it might be the other way around that in fact this would engender a long term relationship with an attorney and that short term on a project basis customers could come out ahead.
Eido Walny
Customers could certainly come out ahead I think one of the best things that they can do is budget. When you’ve got a project that you know its going take some time one of the things that clients often complain about, complain is a strong word, but one of the things that make the relationship difficult is the fact that budgeting is almost impossible when you’re billing on an hourly basis. You may have months where there is very little work done, you may have months where there’s a lot of work done you may have months that are in between when you have business owner clients, businesses as clients and even households with the economy the way it is budgeting has become very, very important and so clients at least have the opportunity to evaluate whether or not they want a get into a project knowing full well on the front end what its going to cost them. In addition to just knowing outright what the cost is going to be the next thing they can do with their attorney is figure out how they’re going to pay that bill. Are they going pay in three installments, five installments, ten installments? What can they work into their business or household budget to make the billing process which is always the worst part of the relationship a whole lot easier? The other thing that the client or the customer can do is evaluate whether financially the project is worth getting into at all and they figure that out on the front end as opposed to on the back.
Alisa Parenti
Have you had any customers kind of balk at the change or seen or heard of that reaction?
Eido Walny
I personally have had absolutely nobody complain about the process. Certainly you don’t have a hundred percent close rate but at least when a client decides not to go forward with the project they’re doing so because they have again evaluated what their needs are what the proposed cost of the project is going to be and for them the personal decision has been not to move forward with the project. Historically when you bill on the billable hour generally speaking you’re giving the client one variable in a two variable equation. You can tell the client what your billable rate is going to be but generally you’re guessing or estimating or not even guessing, or estimating how much time is going be required to do the project. so historically what ends up happening is the clients start getting bills and as the bills start to stack up the client will balk at paying or they won’t want to go forward with the project but by that point the attorney has spent a lot of time on that relationship. Knowing on the front end what the cost is going to be even if the client decides not to move forward at least the attorney hasn’t spent a lot of time doing more than some preparatory work with the client so it really is an efficient proposition for both sides.
Alisa Parenti
What are some typical legal services that fall under this flat rate and what are then the rates that, does it vary across the country?
Eido Walny
Rates on projects certainly are going vary based on different areas of the county on different projects. Certainly what you might expect to pay for an estate planning project may very well be significantly different than what you pay for a specific business proposition so there’s not ever going to be an ala carte menu per se…but at least the sides can get together and figure out what that numbers going to be before they enter into specific project. In terms of practice areas where this is going to be most beneficial its really going to be those service areas where the attorney on the front end can reasonably figure out a approximately how much time is going to need to go into a project. I think estate planning sets up very well for that because many estate plans within certain parameters are going to be very similar to previous plans. So for example myself, doing estate planning and asset protection I generally know about how much time is going to go into a project. For something like litigations where the litigation matter could settle tomorrow or it could wind up at the supreme court ten years from now, a flat fee billing arrangement may not be
quite as easy but the trend that I’ve seen in that area of the law is to really segment the litigation process and try to flat fee those various segments which I’ve seen work very well for clients.
Alisa Parenti
Okay that’s great. Are there any additional points that you want to make that I didn’t ask about?
Eido Walny
I would say that the one thing for attorneys that are thinking about getting into doing flat fees for their clients the one thing that they want to be careful about is to really know their practice areas well. From a business perspective the one pitfall that we always face is to name a flat fee for a project that ends up far exceeding the cost and time estimates that we had tried to calculate when naming the flat fee especially if you’re a small firm to get into a flat fee arrangement which ends up far, far exceeding the time allotment that you may have quoted the client you’re going want to stick to that flat fee quote which may end up being a very bad business arrangement on the legal side.
Alisa Parenti
Eido Walny thanks for joining us and thanks to you for listening to Money Markets and More.
