Legal Services for Small Business: The Importance of Value Pricing

Many small businesses are concerned with the inherent costs associated with legal counsel and therefore reason that they can forgo legal advice—that is, of course, until they get themselves into trouble. The reality though is that an attorney should be a line item in your expenses even if not engaged most months of the year. But if cost is a concern then the first factor to consider when selecting legal counsel is their pricing model.

Most attorneys bill their clients using an hourly billing model, however, this can be distasteful to many small business owners who closely watch their bottom line and fear getting into billing cycles with no apparent caps. And with good reason—most successful businesses know what their expenses are. Usually things go into a tailspin when you don’t have control of your spending.

The hourly billing model for attorneys is very 20th century thinking. I started my legal career in the last century but swore that I would do things differently once I could. For those who feel the way I do, there is an alternative: value pricing. Value pricing in the legal industry is still in its infancy, but it is the future.

The concept is similar to the widely known and accepted “project pricing” model for most other industries and centers around finite costs for specified deliverables. With the traditional hourly billing model there is no incentive for the attorney to end the engagement in a timely fashion. You (the client) and the attorney’s goals are therefore not aligned. Conversely, value pricing is results oriented, aligns client and attorney goals and keeps legal costs within quantifiable and expected norms. All of this is key if you’re operating on a limited legal budget.

…Value pricing is results oriented, aligns client and attorney goals and keeps legal costs within quantifiable and expected norms.

I have personally seen the benefits of value pricing to my clients. In the end they care little about how I do what I do and more about the fact that I get the results and the professional manner in which I deliver them. Hourly billing gets in the way of all things attorneys and clients really need to focus on…namely, the work.

As an attorney, being measured by my worth as opposed to how long I can sit at my desk is the professional lifestyle I prefer. The fact it allows both my client and I to both be on the same page, as it were, and that all of our incentives are properly aligned with business goals makes the engagement mutually rewarding.

If you currently have an attorney that is billing you by the hour, ask him or her why. If your attorney cannot think strategically, offensively and proactively every single day, you should find one who runs their business the same way you run yours.

If you’re currently looking for an attorney seek out one that offers value pricing.