With flat fees becoming more and more popular in the legal field, lawyers are becoming aware that the fees they charge reflect much on the relationships with clients. The alternatives to the hourly rates are helping many attorneys attract and retain clients.
When lawyers decide to offer the clients alternative type of fee, often they start with capped fees because they’re very similar to the hourly. With cap fee, they will charge the client an hourly rate up to an agreed upon limit (for example $15,000 total for the whole work on a matter).
It seems this approach is well appreciated by clients. Just recently we heard from LegalTrek user Mike Peterson that one of his clients chose him as a lawyer precisely because of capped fees. Here’s the story.
Mike advises in corporate and related fields of law, and his clients are commonly small business owners, CEOs, or General Managers of newly-established branches and subsidiaries. More often than not, clients have a limited budget, even in the most sensitive matters (the so-called bet-the-farm situations). Therefore, as Mike told us, being able to offer and work under a cap is a huge competitive advantage for his practice.
The Benefits of Capped Fees
After many talks with his clients, Mike claims it is essential for customers to be aware how much the legal service would cost, especially in the worst scenario, in order to be prepared (and not financially surprised) once the work is done and the bill arrives.
The benefits are huge: clients are calm because they are informed and reassured about the total liability, they trust the lawyer and are more likely to make referrals. Anyone using standard hourly billing is making it uncomfortable for their clients since their representation budget is virtually unlimited.
Using Cap Fee in LegalTrek
We also think capping fees is a good approach lawyers can use to retain clients and differentiate themselves from competitors. So we made it as easy as possible for lawyers like Mike to manage and track their cap fees. Cap fee can be added when creating a matter just by clicking on the checkbox “Cap fee” and by adding the wanted expense amount (as shown on the image).
We took care to reassure lawyers that whenever the cap value is surpassed, it won’t be entered in their billings. If you click on the checkbox: “Force cap on billings” the co-workers won’t be allowed to enter more charges once the limit is reached.
Do you use capped fees in your law practice? Share your thoughts below!