Canadian Lawyer - sample

18 N O V E M B E R / D E C E M B E R 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m First, labour requirement risk reflects the unpredictability of what is required to resolve a certain file. How many hours will it take to get a certain matter settled or adjudicated? How many of those hours can be served by lower-cost juniors and clerks and how many will require higher- cost senior lawyers? The answer depends on factors that are hard to predict at the outset, including the behaviour of the other side or the client. Labour require- ment risk is eliminated by a retainer allow- ing the firm to be paid for every hour that turns out to be necessary. Second, non-payment risk is the chance that the client will not voluntarily and promptly pay the agreed-upon fee. Collection issues are common in per- sonal plight legal practice. The clients are individuals with shallower pockets than corporate or government clients. The life crises that create these legal needs (e.g. loss of employment or divorce) will also often affect their ability to immediately pay for legal services. Non-payment risk is eliminated by a sufficiently large pre-paid cash retainer. What's wrong with pre-paid time-based billing The advantages of pre-paid time-based billing come at a heavy price to access to justice, client satisfaction and even firm economics. Clients don't like not knowing how much services will cost before they agree to purchase them. They don't like having to take it on faith that time-based dockets are truthful. And they definitely don't like having to deposit cash retainers for services before they receive them. Personal plight law firms that find workable alternatives to pre-paid time- based billing find it easier to attract future clients and more pleasant to deal with existing clients. They also spend less time and energy dealing with the client com- plaints that time-based billing tends to generate. The problem is easy to state: How can personal plight law firms ditch pre-paid time-based billing — and reap the rewards of doing so — without choking on labour requirement risk and non-payment risk? Three leading alternatives often work more effectively: contingency billing, flat- ter fees and legal expense insurance. Contingency billing Contingency billing is a powerful pricing model that preserves accessibility while reducing risk for the personal plight firm. Because the firm can deduct its fee from @NoelSemple L E G A L I N N O VAT I O N N O W O P I N I O N magine a list of clients' top 10 pet peeves about law firms. Pre-paid, uncapped time- based billing would rank high. Why do so many firms in niches such as family law, estate litigation and employment law stick with this much-unloved system? How can these firms realistically and profitably move past it? Risks for personal plight law firms Distinctive business practices in a sector of the economy can often be traced to spe- cific risks confronting firms in that sector. Pre-paid time-based billing addresses two distinctive risks for firms in the "personal plight" area. (Personal plight is a sociological term for law practices in which (i) the clients are individuals and (ii) the legal needs arise from disputes.) Get creative in billing clients for dispute resolution Most individuals looking for legal help in a dispute would love to scrap pre-paid, uncapped time-based billing, and lawyers should be open to that By Noel Semple I

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