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

What the Law Firm of the Future Looks Like: Strategy, Structure, and Supercharged Lawyers

I was pleased to be interviewed recently by Michelle Crawford, Founder of Being More Human, for their webinar, “The Law Firm of the Future,” which was presented in Newcastle, Australia, on June 24, 2025.

Here’s a summary of my interview with Michelle. I shared my views on the future of law firms, AI and the leadership qualities that will define success over the next decade.

Breaking Free from the Pyramid

When Michelle asked me what the law firm of the future means to me, I told her we need to move beyond the traditional pyramid structure we’ve relied on for decades. That model, where equity partners sit at the top, supported by layers of associates and staff, has worked for a long time. But it’s not built for what’s coming next.

With AI and other technologies transforming how legal work gets done, I see firms shifting toward a flatter, platform-based structure. This will be a more client-centered, collaborative structure, with success measured by outcomes and value created, not just time. We won’t need as many associates performing repetitive tasks, and we’ll start integrating professionals from outside traditional legal roles, such as legal engineers and data analysts.

Equity partners will still play a vital role, but the real value will come from how well we can deliver outcomes through innovative systems and multidisciplinary collaboration. Power dynamics within firms will shift, too. Influence won’t just come from seniority or book of business; it will come from how well you can contribute to a team that’s built for speed and client value.

The Most Critical Changes Firms Must Make

When I look at how law firms currently operate, I see two changes that can’t wait any longer.

First, we need to move away from time-based billing. As we adopt AI and become more efficient, relying solely on billable hours starts to work against us. If we’re doing things faster but still charging by the hour, we’re shrinking our revenue. That’s why I encourage firms to take value-based pricing seriously; pricing based on the outcome or the value to the client, rather than the time spent.

The second adjustment is building real support for AI implementation. This isn’t something lawyers can do alone. We need legal engineers and operational professionals who understand how to integrate technology in a way that delivers genuine value. Efficiency on its own isn’t enough; we must connect it to pricing and the client experience.

Starting the AI Journey Right

I always tell firms to start with their workflows, not with tools. Before investing in AI or diving into platforms like ChatGPT, map out your processes. Where are the inefficiencies? Where are you duplicating effort or overcomplicating tasks?

Sometimes the answer isn’t to automate, it’s to eliminate or redesign. If a workflow is broken, automating it makes you faster at doing the wrong thing. Once you’ve rethought your processes, you can explore tools that help you do things more efficiently and effectively.

It’s also critical to set policies around AI use. These technologies are advancing rapidly, and you must manage issues like hallucinations and data security. A recent Thomson Reuters survey showed that regular AI usage among lawyers doubled in a year, from 20% to 40%. This is moving fast. If you haven’t started, the best time is now.

Culture and Talent: The Human Side of Transformation

Culturally, firms need to rethink their leadership style in this new platform structure. You’re bringing in a broader mix of multidisciplinary professionals, and need leaders who know how to work collaboratively and lead diverse teams.

That means making space for empathy and inclusive leadership. Emotional intelligence is going to become more critical than ever. AI can handle a significant amount of legal grunt work, but it cannot replace the client relationship and business development functions. That’s where people will shine.

Job descriptions will also change dramatically. Team members won’t just be “partners,” “lawyers,” or “staff.” They’ll be contributors in a flexible, tech-enabled system. And firms that adapt their culture to that reality will attract the best talent.

My Bold Prediction for 2035

By 2035, we may no longer refer to them as law firms. We’ll be seeing global platforms that bring together lawyers and multidisciplinary professionals under one roof. Midsized firms will get squeezed as their clients accelerate the adoption of AI for in-house legal work. Smaller firms that supercharge their lawyers using AI will be a force to be reckoned with.

And I hope we retire the term “non-lawyer.” Everyone who contributes to client outcomes, whether they’re a lawyer or not, deserves equal recognition and opportunity. We shouldn’t define people by what they aren’t.

We’ll also see changes in ownership models. In some parts of the world, such as the UK, non-lawyer ownership and multidisciplinary practices are already well-established. That change is happening slower in North America, but it’s coming, and AI is accelerating it.

I believe firms will become increasingly integrated, with fewer silos and a greater focus on collaboration across disciplines. That’s how we’ll deliver high-value services and meet our clients’ evolving needs.

The future belongs to firms that can adapt quickly and focus on delivering value to clients. The transformation is already underway; the question is whether your firm will lead it or be left behind.

How to Measure the Impact of AI in Your Law Firm: KPIs That Matter

The KPIs That Separate Hype from Real Value

Artificial intelligence is no longer experimental in leading law firms. It is becoming part of the infrastructure. But enthusiasm alone won’t convince partners or clients that the investment is worthwhile. Like every other strategic initiative, AI must earn its keep and the only way to demonstrate that is with clear, meaningful metrics.

Here is a practical KPI playbook you can apply to pilots, full-scale rollouts, and everything else.

1. Productivity & Quality KPIs

Show the “work smarter, not harder” dividend

Time Saved per Task measures the average minutes required to complete specific legal work, including reviewing a contract, drafting a memo, or conducting research before and after AI implementation. This metric quantifies pure efficiency gains and provides concrete evidence of productivity improvements everyone can understand.

Billable Hours Reclaimed tracks how many non-billable hours are converted to client work when AI handles routine administrative tasks. This KPI links AI directly to revenue potential by showing how technology frees lawyers to focus on fee-generating activities.

Document Turnaround Time evaluates the complete cycle time for client-facing deliverables from assignment to completion. Faster service delivery translates directly to happier clients and improved firm reputation in the marketplace.

Error Rate monitors the number of substantive or formatting errors per document after AI implementation. This metric demonstrates quality assurance improvements and potential malpractice risk reduction, which is particularly important for regulatory filings and complex transactions.

2. Financial KPIs

Translate speed and accuracy into dollars and cents

Cost per Matter calculates the total internal resources required for each client matter by adding staff time multiplied by their hourly rates plus technology costs, then dividing by the number of matters closed. A declining trend in this metric proves operational efficiency and better resource utilization.

Profit Margin per Matter compares fees collected against total costs to confirm that increased speed isn’t eroding profitability. This metric ensures that efficiency gains translate into financial benefits rather than doing more work for the same revenue.

Return on Investment (ROI) represents the ultimate “stay or stop” metric by calculating annual savings or extra revenue minus AI spending, divided by total AI investment. This comprehensive measure captures the full financial impact of technology adoption.

Billing Realization Rate divides actual billed amounts by total billable time to measure whether improved value perception drives higher fee collection. When AI enhances service quality and speed, clients are often more willing to pay full rates.

Capacity Utilization compares matters handled against the practical capacity to reveal whether AI scales the practice or makes existing work easier to complete.

3. Strategic & Client-Facing KPIs

Ensure AI strengthens the firm’s competitive edge

Client NPS* and Satisfaction Scores capture direct feedback through post-engagement surveys about faster, more consistent service delivery. These metrics prove operational improvements translate into better client experiences and stronger relationships. *Net Promoter Score

Lawyer Adoption Rate measures the monthly percentage of lawyers actively using AI tools, providing insight into cultural buy-in and training program effectiveness. High adoption rates indicate successful change management and user acceptance.

Client Onboarding Time tracks the duration from initial intake through conflict clearance and matter setup. Faster client starts boost confidence and demonstrate the firm’s operational excellence from the very beginning of the relationship.

Lawyer Engagement and Burnout Indicators monitor pulse survey results, turnover rates, and overtime hours to ensure AI lightens workloads rather than adding technological stress. Successful AI implementation should improve work-life balance and job satisfaction.

Strategic Alignment Score captures leadership’s assessment of how well AI initiatives contribute to broader firm goals on a scale from one to five. This metric keeps technology pilots tethered to strategy rather than novelty and ensures investments support long-term objectives.

Implementation Tips

Start with a Baseline. Record pre-AI numbers for every KPI you choose since improvements are impossible to prove without clear starting points. Establish measurement protocols before deploying new technology to ensure data consistency and accuracy.

Select a Small KPI Set. Three to five metrics per initiative provide plenty of insight without overwhelming decision-makers. Too many measurements dilute focus and make identifying the most critical trends and outcomes challenging.

Express Results in Both Time and Money. Partners think about profit margins, while associates focus on billable hours and workload management. Present findings in both formats to ensure your message resonates with different audiences throughout the firm.

Visualize Relentlessly. Use dashboards or monthly scorecards to make wins and red flags impossible to ignore. Visual reporting helps maintain momentum for successful initiatives and provides early warning signs when adjustments are needed.

Iterate, Retire, Replace. KPIs that stop driving decisions should be swapped out for more relevant measures. Measurement is a living process that should evolve as your AI implementation matures and firm priorities change.

Bottom Line

AI’s promise is compelling, but only disciplined measurement will turn that promise into proven value. Pick your KPIs, track them consistently, and let the data guide your firm’s next move, not the hype.