Outcomes based pricing.

A recent study of some of the most sophisticated law firm clients has shown that a clear majority of clients (84 per cent) want fixed price billing from their lawyer.

Despite this, resistance to change and innovation in the legal profession is deeply entrenched, and time-based billing remains the preferred choice for most law firms.

“Clients truly despise a system of 6 minute units…If you think clients do not sometimes feel like this, I think you need to get out more. Clients should not have to pay like this for process, and they should not do so. What they should be prepared to pay for, and what they do not begrudge, is paying for real skill and experience.”

Chief Justice James Allsop AO, Chief Justice of the Federal Court Australia

The Problem.

The majority of law firms use the “6-minute unit” to charge their clients to complete particular tasks.  However the benefits to clients of using this system have since disappeared:

“With no gauge for intangibles such as productivity, creativity, knowledge or technological advancements, the billable hours model is a counterintuitive measure of value.”

The much-publicised criticisms of this existing model include:

  1. Rewarding inefficiency and dilatory practices (the more time they spend the more they are paid;
  2. Uncertainty and “bill-shock”; and
  3. Discouraging innovation and time-efficient solutions to clients’ needs.

The authority on the future of the future of the legal profession has said:

No longer will the law be meted out occasionally on the basis of billing by the hour.

The solution.

One solution to this problem is offering consumers of legal services a genuine alternative to time-billing based on the outcomes the law firm achieves rather than the time they spend.  Pragma is willing to offer this model of pricing to all of its clients: we use up-to-date technology that allows us to send our clients proposals that specify prices according to outcomes rather than time spent.

Need a legal problem solved? Try our pragmatic approach.

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