Our Billing Philosophy
Legal services should be reasonably priced and affordable having regard to the particular issue being addressed and work being performed.
In a traditional law firm model billing by the hour is often the only pricing practice offered to clients. This model does not provide clients with options.
We understand the frustration of our clients when they ask lawyers charging by the hour about cost, only to be told “I’m not sure”. How can a business understand the impact of legal costs without being able to accurately budget for legal services?
We believe that one size does not fit all when it comes to pricing legal services. We provide many options for our clients to choose from, depending on the work we are being asked to perform.
Types of Fee Options
Would you buy a car without knowing the price of the car? Of course not, so why would you purchase legal services without knowing how much you’ll be paying?
Under immense pressure to control expenses, clients are driving the trend towards predictable and open pricing. We have been at the front of this trend.
Hourly billing is not our preference as we believe that hourly billing is often not in our clients interest. We also feel that hourly billing is an obstacle to collaboration because there is the constant pressure of the “clock” and the feeling that bills are mounting, rather than working efficiently towards resolving the legal issue. Collaboration promotes relationships and helps to achieve the best result for both our clients and for our firm.
To choose the pricing model that maximizes the value between you and Watershed, it is important that we discuss the options before engaging in the work. We have learned that for transparent pricing arrangements to work, there must be open two way communication with our clients throughout the retainer.
If something unanticipated (we call it “out-of-scope”) takes place during the project or work, we have a discussion about how to deal with it. In our experience, this discussion does not occur often because we work hard at the outset and in collaboration with the client to anticipate the uncertainties and account for these in our fee arrangement.
These alternative fee arrangements are not about creating a windfall for Watershed or our clients. These arrangements are about agreeing, up-front, to a pricing arrangement that works for everyone and then moving on to effectively and efficiently achieve the best result possible without worrying about whether the clock is ticking.
Here are some examples of the Alternate Fee Arrangements that we have entered into with clients.
Fixed or Flat Fees
A fixed or flat fee is one where we agree on the fee to be charged for the legal services.
Discussing and agreeing to a fixed fee at the outset allows clients a measure of predictability in budgeting legal expenses and avoids surprises. You know what your costs are and this transfers the risks of inefficiency onto Watershed (something lacking in hourly billing).
We have used this type of open pricing arrangement in a variety of projects including arbitration hearings and collective bargaining negotiations, preparation of template hiring documents (application forms, offer of employment letters or agreements, consent to background check forms), policy review and drafting, training design and delivery, and civil litigation.
Before the billable hour, the annual retainer was the standard fee arrangement for law firms.
Under this arrangement, the client will pay an agreed to retainer on some periodic basis (monthly, for example) for Watershed to be available as needed to assist for a specific time.
This billing method provides the security of knowing that the “meter is not running” every time you call us. This encourages our clients to make use of our services without worrying about the cost since these have been agreed to at the outset. This fee option works well human resources advice, day-to-day employee issues such as performance management, attendance management and accommodation, and performance management.
A hybrid structure allows our clients to combine different billing methods to be used on a single file or matter. For example, we can discuss a fixed fee for an initial service (e.g. conducting an investigation into a workplace harassment complaint and preparation of a report) and hourly billing for any follow up after the report is finalized.
Watershed LLP Guarantee on Value Adjustment
We offer the Watershed LLP Guarantee on Value Adjustment in our Alternate Fee Arrangements.
We are prepared to enter into retainer agreements that provide a client with the right to adjust our billing, upward or downward, within 30 days of the invoice date based on our client’s perception of the value received.
AFAs are designed to reflect the value of a particular piece of work as determined from the clients perspective. What is the value to you, the client, of the legal work being undertaken?
Where our clients see value that exceeds their expectations or where our client is not satisfied, they can adjust the fee either upward or downward. We strongly believe that this promotes long term open relationships.
We have been told that this is “risky”. Of course it is, but it’s a risk that we’re prepared to take given our commitment to our clients and our confidence in the value of our services.
We also work under the traditional billing by the hour approach. Under this model, we will simply apply our hourly rates multiplied by the hours we spend on your matter to come up with the fee. We have been able to keep our hourly rates low for our level of experience because of our low-overhead model.
Where we charge by the hour, we have tried to remove the tension between law firm and client inherent in this hourly billing method. We do not, for example, have billable hours targets and we are not compensated or rewarded based on how many hours we bill.
We measure our success, even when we are charging by the hour, by the results we achieve for our clients and the value our experience adds to the engagement rather than by how many hours we bill in a day, week, month or year.
To Learn More
Call one of the Watershed lawyers if you would like to learn more about our pricing options and hear why we believe this approach makes a great deal of business sense in most case.