Paying too much for a lawyer: high-priced legal fees for small businesses, start-ups, and individuals.

http://online.wsj.com/article/SB10001424052748703615104575329193640764492.html

Wall Street Journal readers can appreciate this article on high-priced legal fees and the infamous billable hour. Substantively, it’s covered terrain. However, every time headlines like this surface, businesses and individuals take another step closer to stabilizing legal costs – something large companies have yet to prioritize. Billable hour models grab hold of big companies, siphoning their budgets for survival. Still, large corporations have lots of money; they’ll continue to spend it on attorneys like its 1999.

For those not in the business of acquiring Endicott Steel, high priced attorney fees are a serious hurdle to freeing up assets and retaining profits. Nothing hurts a small business more than the uncertainty of the billable hour and its potential drain on profits. Young attorneys hate it; I know I did. Fortunately, the rants and raves appear to have gained traction and alternatives to the billable hour are making headlines.

I founded my office with the fixed fee model in mind. It allows us to stay competitive, and evolve alongside small businesses who incorporate cost-cutting measures aimed at reducing legal expenditures. Apparently, other firms have the same idea. Good.

Here is how it works:

Hourly increments of time add up, and consequently, so do the bills. More disturbing, without knowing the time in which it will take an attorney to complete a project, individuals and companies have no way of predicting the total cost of legal expenditures. Imagine going to a grocery store with no price tags. You get to the register and the clerk, after burying the eggs somewhere beneath the 2 gallon jug of milk, tells you, “We’ll send you a bill.” One problem, you still don’t have a bottom line total cost. Another problem, they’re not going to send you one bill, they’re going to send you one every month for an undetermined period of time that will frequently fluctuate.

Fixed fees, however, force attorneys to listen to their client’s problem, asses the amount of work involved, and assemble a strategic plan in which to effectuate results. The fee is paid in lump sum, and the process fosters efficiency, instead of rewarding long, drawn out litigation. It also removes some of the guesswork, allowing small businesses to work legal fees into their budget. The alternative involves hoping the bill is not devastating, as it likely was the month before.

For attorneys, the fixed fee model is great marketing. Most lawyers are still addicted to the old billable hour method. Offering steady fees is competitive. Contingency fees help individuals who have no money up front, but they’re not always available. With a fixed fee model, attorneys can calculate how much work is involved, quote their services, and spend more time focused on problem-solving and less on justifying the next bill. For small businesses and individuals, this is the start of a relationship built on reasonableness. Instead of exploiting vulnerable clients with open-ended litigation or suppressing the excitement of a start-up with high incorporation costs, attorneys can provide a reasonably priced foundation on which to develop a strong client relationship. In short, do right by your client once, and they’ll come back.

Large companies have grown accustomed to the volatile liability known as legal. Smaller companies and individuals, however, now have a choice. Imagine paying your attorney once, and never again having to worry about bills from High Priced Lawyer, LLP, for the third month in a row. Cost-cutting measures finally have a chance to succeed in the legal department. It starts with a novel idea: finding out how much something costs before you buy it.