Legal bills have traditionally been based on the idea of the billable hour. The problem many AP departments have with this model is that it’s impossible for them to estimate ahead of time how long a project will last and, in turn, how long it will cost.

For small and medium-size businesses without a lot of cash, this uncertainty can lead business owners to not seek legal advice when they need it. However, according to an article published in the St. Charles County Business Record by Bradley Crandall, law firms have alternatives to the billable hour that can benefit small businesses.

There are two common alternatives to hourly billing: flat rates and monthly retainers. A flat rate is determined by the attorney and the client who agree on a fair price for a project after taking into account the hours and resources it will take to complete. The client knows exactly how much the project will cost prior to the attorney doing any work.

In a monthly retainer arrangement, the client pays a fixed fee every month based on expected usage of legal services. Clients have access to all paralegals and attorneys in the law firm.

There are several advantages to using the alternatives to hourly billing. The client is no longer surprised by the amount of the bill when it arrives. With flat rates and monthly retainers, clients are more likely to consult an attorney because they know the price upfront. This allows them to save money in the long term. Flat rates and retainers also help attorneys and clients budget effectively, help cash flow by removing some of the variances and reduce overall costs. These alternatives are more fair than hourly billing and motivate attorneys to work more efficiently and complete the project as soon as possible.

To see the full article, click Alternative law firm billing benefit smaller businesses.