HOURLY BILLING ISSUES FOR THE SMALL FIRM
Scott Finlayson
Economics of Law Practice Seminar 2000
Outline No. 2
September 25, 2000
Thesis: Given, there are parameters (financial, market, and ethical) to the amount of hourly billing your firm can charge, should a small firm charge hourly fees and if so how much?

I. Introduction:

A. Does hourly billing have a place in the 21st century small law firm?
1. Introduction to critiques.

2. Response to critiques.

B. Given there are parameters (ethical, market and financial) to the amount of hourly billing your firm can charge, what should your small firm charge?
1. Ethical.

2. Marketable.

3. Financial.

II. New Age/Old Billing.
A. Does hourly billing have a place in our new economy?
1. Critiques of hourly billing. (its just a bad practice)

2. Suggested better alternatives. (its not a bad practice, but there are better ways)

3. Arguments for hourly billing as it exists now. (with new technology and ethical

4. Can hourly billing itself evolve into a marketable billing practice?

B. Technology and billing.
1. Availability of software for various billing practices.

2. Can software make hourly billing a more reliable and marketable practice.

III. Ethical Parameters. (there are consequences for surpassing reasonable fees)
A. Reasonableness. (ABA and other sources say there is an ethical cap)
1. ABA (resolution)

2. Devil's Advocate. (website)

B. Unethical practices (make your hourly rate what it needs to be to avoid unethical practices)
1. Charging more than one client for the same period of time.

2. Surcharges on expenses.

IV. Market Parameters. (your place in the market)
A. Your firm's average counsel's experience. (experience dictates price)

B. The age of the firm. (the older the wiser and the more contacts for business)

C. Your firm's size. (size does matter)

D. Your region. (data: 8 markets average fees)

1. East Coast (urban)

2. East Coast (rural)

3. Midwest (urban)

4. Midwest (rural)

5. Mountain (urban)

6. Mountain (rural)

7. West Coast (urban)

8. West Coast (rural)

V. Financial Parameters. (the needs of your business)
A. General Accounting Practices.
1. assumptions.

2. cost analysis

B. Mechanics of hourly billing.
1. Billing v. expenses

2. Overhead v. expenses (philosophy of which things may be added into billing)

B. Minimum hourly billing. (what you need to charge)
1. Charge enough to avoid unethical practices?

2. Do you need a pot of funds for unexpected expenses?

3. What is your firms minium?

4. How often should you analyze your billing structure?

VI. Conclusion.
A. There is growing wholesale critique of hourly billing.
1. That may be an overly generalized critique.

2. Deficiencies with hourly billing can be fixed.

B. Hourly billing can be beneficial to both attorney and client.
1. Client know what they are paying for.

2. Experience can be reflected through stratified hourly rate.

C. You now know what to consider when setting your fees.
Use this information and good luck.