Hourly Billing Puts All the Risk on the Client (You)

One of the biggest differences in our firm is that we quote fixed fees on all matters. Most other lawyers bill hourly, which means the fee estimate they give you is only their best guess as to what the total hourly fees will be at the end of your legal project, but that estimate is not guaranteed and is more than likely wrong – which means you lose.

The problem for you, the client, is that lawyers are notorious for underestimating.  For example, a matter you were told by the lawyer would cost you $10,000 often ends up costing $15,000 to $20,000 or more, which comes as a nasty surprise for you when you get that bill and have to pay it.

I’m not saying that your lawyer is intentionally trying to deceive you; the hourly lawyer probably doesn’t know that he or she is underestimating. It is likely the result of the “planning fallacy” phenomenon, which says that people underestimate the time it will take to complete a future task, despite knowing that those tasks in the past have generally taken longer than planned.

The problem with the hourly billing model is that the client assumes all risk for the poor estimating done by the lawyer since the client has to pay for the additional time spent by the lawyer. If the lawyer spends more time on the matter than estimated, the lawyer gets paid more.

That is not what happens in our firm since we deal with fixed fees instead of billing by the hour. If we underestimate the time it takes us to complete your legal project, that’s our problem – not yours.