Are you buying time or expertise?
Sir Paul McCartney wrote the song “Yesterday” very quickly …. after the melody came to him in a dream…
With this and many other moments of brilliance, time had nothing to do with it. There is no question that there is a time and place for lawyers charging by the hour, also known within the profession as “time costing”.
When you think about it though, charging legal costs by the hour can be easily criticised, on the basis that it rewards inefficiency and discourages lawyers from completing tasks quickly and easily. It also has nothing to do with the true value of the job.
Often in business, you want a legal adviser to perform a clear service, with a clear deliverable, such as an advice, a contract, or solution to a problem.
If the lawyer receives a clear brief they should be more than able to quote a price based on the value of their advice and the expertise they provide, and that price should not be tied to time. That just moves the risk to the client and not the lawyer.
How long it takes them to provide the advice should be largely irrelevant to the price – think of it this way; you obtain the exact same advice from 2 lawyers – one who took a week to work out the advice and another who only took 24 hours.
Should the lawyer who took a week get paid more for the same advice?
Under the time costing method this is exactly what would happen.
In my mind the one with the quick turnaround should be paid at least the same if not more.
It’s somewhat of a mind shift on both sides – but in such a case you should be buying expertise not time.
What you focus on grows
If a lawyer is paid according to the value they create for the client, they are more focussed on creating that value, and finding a solution quickly. If a lawyer is rewarded by the hour, it is human nature, they are incentivised to take their time and find ways to complicate the advice. You can see how easily the lawyer’s bill can blow out, often with little bearing on how valuable the outcome was.
Take a sad song and make it better
With the market moving towards greater transparency in business dealings, and clients wanting more for their money in less time, this age-old way of paying lawyers is out of step. A lawyer who is not driven by how long everything takes, can be upfront about their expertise, confident as to the value of their work, and give you the full picture on costs.
This value based approach to charging does not mean that the lawyer can’t advise the client later that a further charge may apply for unexpected complications in a matter.
At the end of the day, we both need to make money, but not at each other’s expense. That for me is the cornerstone of great client relationships.
Imagine if Sir Paul had sold his song writing skills in six-minute increments…