Category: Law Firm Strategy

Pricing the Client, Not the Work: A More Flexible, Value-Driven Approach to Legal Billing

I often see lawyers debating on LinkedIn about the merits and disadvantages of hourly billing versus value-based pricing. I don’t see it as a question of doing it one way vs. the other. Each client will have their own unique needs regarding how they prefer to be billed. And it doesn’t have to be just one way. The right way to price/bill is the one that best meets your client’s needs.

We need to start offering options: that could mean two or three different options, including hourly billing or value-based pricing, or a hybrid billing option, which includes a monthly retainer plus hourly billing, etc. This is my twist on “Price the client, not the work”, as Ron Baker recommends.

Clients Have Different Needs, So Give Them Different Options

Some clients still prefer hourly billing. Others want predictability through flat fees or monthly retainers. Some are open to value-based pricing or outcome-contingent models. A few are even willing to pay a premium for guarantees or guaranteed availability.

All of these models can coexist. Your job is not to convince every client to fit your preferred pricing/billing method. Your job is to understand what the client values, then design a fee structure that reflects that.

In Implementing Value Pricing, Ron Baker lays out a clear, eight-step process for moving firms toward value-based pricing models. But even Baker doesn’t argue that it’s all or nothing. Instead, it’s about moving along a continuum, away from pricing based on effort, toward pricing based on value.

Hourly Billing Isn’t Going Anywhere, But It Shouldn’t Be the Only Option

Let’s be realistic: hourly billing isn’t disappearing anytime soon. And that’s okay. What we can do is evolve from relying on it as our only pricing model.

Hybrid models are often more practical and better aligned with both firm and client interests. A client might be on a monthly flat fee for routine advisory work, with defined scope projects priced at a fixed fee, and a litigation file on a success-based arrangement.

The point is flexibility. And when you build tailored fee structures, you change the conversation from “what’s your hourly rate?” to “how can we work together in a way that makes sense for both of us?”

Unique Pricing Drives Unique Value and Breaks the Race to the Bottom

If your pricing model looks like everyone else’s, then you’re just another commodity. That’s when clients start comparison shopping based on price alone.

But if you’re structuring your pricing based on deep knowledge of the client’s goals and preferred ways of working, you’re no longer interchangeable. You’re delivering something tailored and valuable. You’re a legal professional, not a plumber.

And most importantly, you’re helping the client win, which means you’ll win too.

Track Your Time Even When You’re Not Billing It

One more essential point: I believe you should still record time, even when using non-hourly billing models.

Time tracking isn’t just for billing. It’s how you understand your internal costs, opportunity costs, and profitability. If you abandon time tracking altogether, you lose visibility into whether a fixed fee or value-based arrangement is actually working for your business.

Think of it as managing a portfolio. You need data to know what’s sustainable and where the value really lies.

Value Pricing Doesn’t Mean Taking All the Risk

A lot of firms resist alternative billing because they think it means giving up control or taking on all the risk. But that’s not the point.

A good pricing model finds a win-win. The client gets predictability or performance incentives, whatever they need most. The firm gets fair compensation aligned with results and client satisfaction.

Bartlit Beck LLP, the original poster child for alternative billing, still did 50% of its work on an hourly basis in the early years. Why? Because not every client was ready to make the shift. Some simply weren’t comfortable. And even the most visionary firms need to meet clients where they are.

Stop Arguing. Start Listening.

We don’t need to keep arguing about which model is superior. Hourly billing is not the villain. Value pricing isn’t a panacea. What matters is what your client wants and needs.

If you build pricing options around that, you’ll build trust and long-term success for both you and your clients.

References and Further Reading:

  • Ron Baker, Implementing Value Pricing: A Radical Business Model for Professional Firms
  • The American Lawyer (1995), Diamonds Are This Firm’s Best Friend – Profile of Bartlit Beck and its hybrid approach to alternative fees

Can a Small or Mid-sized Firm Lead the Legal Transformation?

How Smaller Firms Can Adapt the Four-Pillar Blueprint to Win

The legal industry stands at a crossroads. While Big Law firms grapple with their transformation challenges, smaller and mid-sized firms possess a hidden advantage that could reshape the competitive landscape entirely.

A compelling strategic framework, introduced by Ted Theodoropoulos in his article “Big Law 2.0: A Radical Transformation Blueprint” (May 2025), outlines a powerful approach. Theodoropoulos proposes that firms revisit their foundational strategies around structure, funding, talent, and delivery.

Although his blueprint targets large firms and assumes eventual regulatory reform, the core concepts are highly relevant to firms with fewer than 100 lawyers. With some adjustments, smaller firms can use this approach to create meaningful differentiation and future-proof their practices.

Pillar 1: Create a “NewLaw” Division Inside the Firm

Rather than splitting the firm into two separate entities, a smaller firm can carve out a focused internal division dedicated to innovation. This unit can run pilot programs that test new service models, such as fixed-fee offerings, AI-assisted research, or client subscription packages.

Even a small team, e.g. one or two lawyers supported by a tech-savvy coordinator, can progress if given the space to operate outside traditional billable-hour metrics.

Why this matters for smaller firms:
Mid-sized firms are typically more agile than large national or international firms. This agility allows them to pilot new approaches without being delayed by layers of internal approval. Small, targeted projects launched today can generate a lasting competitive advantage.

Pillar 2: Fund Innovation with Purpose (No Outside Capital Required)

Theodoropoulos advocates for private equity or IPO capital in the original blueprint to drive innovation. While this may be viable in jurisdictions with alternative business structures, most Canadian and U.S. firms are still bound by rules prohibiting non-lawyer ownership.

Even without external funding, a smaller firm can designate a portion of annual profits, perhaps between 1 and 3 percent, to fund a strategic innovation budget. These funds can be used to:

  • Develop internal legal tools
  • Invest in legal technology or AI pilots
  • Hire external consultants or specialists to guide delivery reform

Why this matters:
The goal is not to build a large innovation fund but to consistently invest in ideas that improve client service and internal efficiency. Smaller firms benefit from having fewer stakeholders in funding decisions. Where a large firm might need extensive partner approval for innovation spending, a smaller firm can move quickly on promising opportunities.

Pillar 3: Expand the Definition of “Top Talent”

The third pillar addresses the changing nature of legal talent. Winning firms will compete for the best lawyers and professionals in technology, operations, design, and data analysis.

Smaller firms can:

  • Establish innovation or legal tech roles outside the partner track
  • Introduce bonuses or phantom equity programs tied to firmwide goals
  • Empower business services professionals with real leadership responsibility

Why this matters:
Modern legal services require interdisciplinary thinking. A smaller firm that values and promotes non-legal expertise will be more equipped to innovate and deliver differentiated value to clients.

Pillar 4: Reinvent How Legal Work is Delivered

This pillar focuses on evolving beyond the traditional billable-hour model. Rather than handling each matter as a one-time engagement, firms can develop repeatable service models that deliver continuous client value.

Examples include:

  • Creating subscription-based legal advisory offerings
  • Using automation to streamline document production
  • Building client-facing knowledge portals powered by AI
  • Packaging compliance and regulatory advice into productized services

Why this matters:
Clients want predictable, transparent, and outcomes-focused solutions. A smaller firm offering scalable legal services can grow revenue without relying solely on increasing lawyer hours.

Getting Started Without Overhauling the Entire Firm

You do not need to adopt the entire blueprint all at once. Many firms begin with one or two pilot projects and build from there. For example:

  • Test a subscription pricing model in a specific practice group
  • Allocate a small portion of profits to innovation experiments
  • Appoint a part-time innovation lead to coordinate internal ideas
  • Initiate partner-level conversations about long-term strategy and capital allocation

Each of these actions builds capability and leadership alignment over time.

Final Thought: Small Firms Are Well-Positioned to Lead

As Ted Theodoropoulos observed, “The market doesn’t wait for consensus. It rewards those prepared to lead the change.” Smaller firms don’t need Big Law’s resources to capitalize on current market dynamics. They need strategic clarity, committed leadership, and the confidence to act while competitors hesitate.

The legal industry’s transformation creates unprecedented opportunities for firms willing to embrace change. Smaller firms that move decisively today may find themselves leading the profession tomorrow.

Attribution:
This article is inspired by and references the Four-Pillar Transformation Framework presented in:

Ted Theodoropoulos, “Big Law 2.0: A Radical Transformation Blueprint,” published May 15, 2025. Ted is a Legal Tech Innovator and 2024 ILTA Innovative Leader of the Year.

What I’ve Learned from Working with Law Firm Leaders

After decades of consulting with law firm leaders across practices of every size, I’ve observed patterns that separate the firms that thrive from those that merely survive. My conversations in boardrooms, over coffee, and during those long strategy sessions have taught me more about legal leadership than any business school case study ever could.

Here’s what matters when building a profitable, sustainable law practice.

The Numbers Don’t Lie, But They Don’t Tell the Whole Story

Every managing partner I work with can recite their firm’s metrics: billable hours, realization rates, and overhead percentages. However, the most successful leaders understand that profitability starts with people, not spreadsheets.

The lesson? You can optimize your way to mediocrity. The firms that consistently outperform focus first on creating a culture where top talent is retained and clients want to keep coming back.

Strategic Planning Is Worthless Without Strategic Execution

I’ve attended countless strategic planning retreats where partners craft beautiful vision statements and ambitious growth targets. However, many of these plans end up collecting dust within six months.

The difference between successful firms and the rest isn’t the quality of their strategy. It’s their obsession with execution. The best law firm leaders ask three questions every quarter:

  • What did we say we’d do?
  • What did we actually do?
  • Why was there a gap?

The firms that succeed aren’t those with the most sophisticated strategies. They’re the ones that consistently deliver on their commitments, week after week, quarter after quarter.

The Talent War Is Real, and Most Firms Are Losing

Here’s an uncomfortable truth: your best people have options, and they know it. The legal market has fundamentally shifted from an employer’s market to an employee’s market, and many law firm leaders are still operating with an outdated playbook.

The firms winning the talent war aren’t just paying more. They’re creating cultures where lawyers feel valued as professionals, not just billing machines. It’s about respect, development opportunities, and having a voice in firm decisions.

Client Relationships Trump Everything Else

You’d be surprised how many firm leaders treat client development as an afterthought. They’ll spend months debating whether to upgrade their practice management software, but won’t invest in teaching their lawyers how to have meaningful business conversations.

The most profitable firms I work with have cracked the code: they view every client interaction as an opportunity to deepen the relationship, not just complete a transaction. Their lawyers don’t just solve legal problems. They become trusted advisors who understand their clients’ businesses.

Technology Is an Accelerator, Not a Solution

I get calls from managing partners asking about the latest legal tech. “Should we invest in AI for document review?” “What about automated time tracking?” “How do we know if our case management system is holding us back?”

I tell them that technology amplifies what you’re already doing. If your processes are broken, automation helps you fail faster. Collaboration software won’t fix your communication problems if your team isn’t aligned.

The firms that get the most value from technology investments are those that optimize their workflows first and then find tools to support those optimized processes.

The Most Important Conversations Happen Outside the Billable Hour

The best law firm leaders I know are voracious learners who invest heavily in relationships that don’t generate immediate revenue. They serve on nonprofit boards, speak at industry conferences, and maintain networks beyond their practice areas.

These activities might not appear on their timesheets, but they’re often the source of the firm’s most valuable opportunities. Business development isn’t just about pitching services. It’s about becoming the kind of professional others naturally turn to when they need legal counsel.

Looking Forward

The legal profession is changing faster than ever, and the firms that will thrive are those led by partners who embrace that change rather than resist it. They’re data-driven but people-focused, ambitious but sustainable, competitive but collaborative.

If you’re leading a law firm today, remember this: your success isn’t measured by how many hours your team bills this month. It’s measured by whether your best people and best clients will still be with you five years from now.

The most profitable firms are built on a simple foundation: exceptional legal work delivered by engaged professionals to clients who see real value in the relationship.