Daily Dispatch

BIGLAW TO SOLO

First, Figure Out Your Billing Strategy

By | Sep.08.11 | Billing, Client Service, Communicating, Daily Dispatch, Money

What happens after you leave BigLaw and become a solo? When John Snyder—a Harvard-educated senior associate in a big New York firm—decided to start his own practice, plenty of people wondered about it. There must be an easier way—especially since it meant getting Big Apple business clients to hire a solo for their needs. As he approaches the one-year milestone with his commercial litigation boutique, John is telling Attorney at Work readers how he’s getting it done—and giving practical advice for lawyers about making it on your own. First lesson? Figuring out your fees ….

When I started my own commercial litigation boutique last year, I gave serious thought to abandoning the much-maligned billable hour. After all, we all know the criticisms: The billable hour rewards inefficiency, places the lawyer’s interests at odds with the client’s, and unrealistically assumes that every hour of time is of the same value to the client.

On the other hand, for a litigator focused on complex and often unpredictable cases, the alternatives are not particularly satisfying. The inherent unpredictability of litigation makes a flat fee arrangement difficult or impossible. Nor does a pure contingency model make sense because, frankly, as a small firm, I cannot afford to bet my practice on the outcome of a case (although I have occasionally negotiated “hybrid” arrangements).

Steps for Building Credibility Through Billing

Ultimately, I decided to keep the billable hour because, in my view, much of the discontent concerning the billable hour can be remedied not by abandoning it, but by using good judgment, foresight and open lines of client communication in applying it. Here are some rules that guide my billing philosophy:

  • Agree on an Overall Litigation Approach. There are many ways to litigate a particular case. Some high-stakes cases justify a “leave no stone unturned” approach, in which the lawyer will research every conceivable theory, fight for every last document, take every last deposition. This approach is effective, but quite expensive. Other cases may call for a more restrained, cost-conscious approach. Sitting down with the client before starting the engagement and agreeing on a litigation approach that makes sense within the broader context of the client’s life and business helps to establish common ground concerning billing expectations.
  • Forecast the Foreseeable Future. While I never attempt to predict how much litigation will cost in total, I can usually estimate (and sometimes agree to cap) fees for the next one or two foreseeable steps (e.g., drafting a complaint, drafting a motion to dismiss, serving discovery demands). Clients do not expect clairvoyance, but a good faith forecast of the near future builds trust and confidence, and helps avoid surprises.
  • Keep Billing in Proportion to a Task’s Importance. Just as there are many ways to litigate a case, there are many ways to perform a particular litigation task. Clients are entitled to expect a lawyer to exercise good judgment in allocating hours (i.e., client dollars) to particular tasks. If a task is “make or break” for the case, I will explain that to the clients and tell them to expect a lot of hours to be billed for that task. On the other hand, some tasks are relatively unimportant, and should be performed with an eye toward maximum efficiency. An indispensable part of good lawyering is distinguishing the critical from the unimportant, and allocating hours accordingly.
  • Candidly Disclose Inefficiency. Despite our best efforts, we sometimes spend too much time spinning our wheels on a task. When billing a client, a lawyer should exercise judgment in scrutinizing his or her own time. Where I determine that I failed to perform a task as efficiently as I should have, I include a line item called “Inefficiency” and will write off an appropriate amount of time (with a brief explanation of why I was not maximally efficient). This is fair to the client, builds credibility by providing transparency and assures the client that, before the bill is presented, it has been scrutinized.
  • Get Bills Out On Time. On very active matters, I bill every two weeks, and never less than once a month on any matter. Getting bills out frequently not only reminds clients to pay their bills, but it also allows clients to review a bill shortly after the work was done, while the work is fresh in their minds.

Ultimately, a lawyer’s billing of his or her client should not be viewed as separate from one’s representation of the client. Rather, it is an integral part of the attorney-client relationship. As with any other aspect of a client engagement, it demands a lawyer’s best judgment, diligence and candor.

John H. Snyder is the founder of John H. Snyder PLLC, a boutique litigation firm in Midtown Manhattan that focuses on complex closely-held company disputes and outside general counsel services for emerging companies. John has deep experience in the private equity and commercial real estate industries, and is a graduate of Harvard Law School and Brown University. John lives in Times Square with his wife, Julie Fei-Fan Balzer.

Recommended Reading

2 Responses to “First, Figure Out Your Billing Strategy”


Comment