Alternative billing options allow clients a sense of security, flat rate

Some firms are looking toward flat-fee or other forms of billing to address client needs.

Steven J. Picco, a partner with Saul Ewing LLP, in Princeton, said his firm began doing alternative billing 18 months ago, when its attorneys first saw clients become more sensitive to their rates.

Picco said the change is unlikely to be short-lived.

“Anything that saves the client money is going to stay for the long term,” said Picco, chair of Saul Ewing’s environment, energy and utilities department.

To design an alternative billing structure, the attorney meets with the client and works out different scenarios, Picco said. Some work by lawyers — such as time spent on transactional or drafting assignments — lends itself to fixed fees, he said.

But there can be major risks for other kinds of work. For example, if an attorney agrees to receive $100,000 to be an outside general counsel for a company, neither side knows how much work is necessary, Picco said.

Saul Ewing and its clients have agreed to share the risk, in some cases. If the firm does between 90 percent and 120 percent of the work it expects to do, the difference is shared. However, if it does less than 90 percent of the expected work, the client pays less, while if it does more than 120 percent, it pays more.

Such an agreement gives the client more certainty, while raising the importance to the firm of managing its costs, Picco said.

E-mail to akitchenman@njbiz.com