What Does Value Billing Really Mean?
Recently I received a call from a lawyer who intended to start value billing and wanted a template to do so. My response was that there is no such thing. How any firm approaches the concept of value billing - charging for the worth of a service, not the cost in terms of time expended - depends on the firm's culture, its practice areas and the needs and sophistication of its clients. A firm that wants an automated process, one that operates without thinking or effort, epitomizes the very problem that value billing is meant to solve.
Until well into the post-World War II era, legal fees were based not only on time spent, but also the nature of the service, the result achieved and the amount at stake. Charging an appropriate legal fee was a matter of professional judgment. That changed in the 1960s when clients and their insurance carriers began demanding template billing statements and lawyers used time records as a management tool to produce them. Using hourly rates, most bills are features lists: this is what I did, this is the time it took and this is what you owe. That approach breeds dissatisfaction among clients, because it doesn't address value and benefits - the worth, as opposed to the cost, of the service.
This is not to say that value billing should return to vague buzzwords. All lawyers, solo practitioners and members of BigLaw alike, can structure what they do to consistently encourage a high client perception of value. Basic elements of that include:
Ensure that all client inquiries receive a prompt response by phone or email. Provide clients with helpful insights and updates about their business sector, without their having to ask for them. Prepare clients for interactive events such as negotiation sessions, depositions, and testimony so they know what to expect and are prepared for what might happen. Never make promises that can't be kept. Particularly with a new initiative, focus consistent, well-planned effort on one project only, to define expectations of value and service. Regularly ask clients for feedback to gauge their satisfaction with the service provided, rather than on the results achieved.
Such value-added elements will produce billing statements that are easy to understand and that clearly list actions taken on the client's behalf while relating them to the time it took to realize that value. The information will be more meaningful to the client, and will go beyond a mere one-size-fits-all template that will simply be self-defeating for firm and client.
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