Contracts – Fixed Fees or Billing By The Hour?

There have been several blog posts recently upon why many lawyers seem unable to break away from the concept of strict hourly billing. Some of these can be found on a blog by a company called Exari. I have no association with this company and do not endorse their products, but you may find some of these posts interesting – if not a little scary: http://blog.exari.com/

It’s obviously difficult to estimate how much time it is going to take to draft a contract from an initial discussion with a client – and sometimes things turn out to be a bit more complicated than originally anticipated and take longer than planned. However, that’s life!

Buying any services with a deliverable – for example a contract, – on an hourly basis can leave you with an unexpectedly high bill unless you know how quickly (and effectively!) someone works. However, buying on a fixed fee arrangement can also mean buying an ‘off the shelf’ product, which may or may not be suitable for you. So what’s the best solution?

If someone is billing by the hour, ensure that spend limits are agreed in advance and that you receive regular progress reports and spend-to-date figures. That way, at least you won’t faint when you get the bill! Alternatively, if you opt for the fixed fee route, select your supplier based upon the referrals and recommendations of people you trust, so that you know that you will get what you are paying for.

All of my contracts and terms and conditions are tailored to the specific needs of the client, and whilst some clients prefer me to work on an hourly (or daily) basis – particularly when I am attending meetings with them to support their negotiations, – many smaller businesses prefer work to be done at a fixed fee. Accordingly, I offer both – and also retainer arragnements for clients who need more regular help and advice.