WHY HOURLY BILLING BY LAWYERS IS NOT GOOD FOR TECH COMPANIES OR OTHER BUSINESSES
Did you ever buy groceries, or a meal in a restaurant, or pay for a surgical procedure? Were you told, “The price of the groceries in your cart today depends on how long it takes the checkout clerk to check you out of the store.” Or “the price of the meal depends on how long the waiter spends with you to explain today’s specials.” Or “the surgical procedure is billed in six-minute increments, depends on how fast the surgeon works and how many questions you ask before the procedure starts.” If that seems like a strange and unfair way to bill for everyday goods and services, it’s exactly how most companies pay for legal services.
Companies, and especially tech companies, are consistent consumers of legal services. They need contracts, they need regulatory compliance, they need legal risk management, they need advice from lawyers. They need an ongoing relationship with legal counsel. Instead, what they get is: Billed by 6-minute increments of contact for “quality time.” So the incentive is not to pick up the phone to the lawyer, not to ask questions even via email, not to look at the attorney as a member of the company’s team, indeed not part of the support team at all, but rather an expense and a luxury.
Yet legal counsel is anything but a luxury. Where companies are interested in building legal relationships with licensees, distributors, agents, service-providers, and others, it is essential that they do so on the basis of a proper legal foundation.
In nearly two decades of practice, I’ve found that the best way to to do this is to make the attorney a part of the team. Instead of billing by the hour, we as attorneys should offer reasonable monthly packages of service that will also have the effect of letting key management and employees in companies know: You can call, you can be in contact, you can have your questions answered, we’re here to support you. With what you need, and when you need it. That’s a healthy relationship rather than a mercenary one. And it also is more honest than trying to guesstimate whether you just spent the last 6 minutes efficiently for a client.
Attorney David Page is a US and Israeli lawyer who is Founder and Principal of InsideOutside Counsel and David Page Law. Educated at Harvard University and the University of Chicago Law School, and fluent in 7 languages, David Page and his firm counsel companies on effective legal and risk management strategies and provide a full array of business legal services.