Clients are demanding transparency and an end to billing by the hour, therefore alternative fee arrangements take a larger share of revenue but without the right tools they are hard to control. 


Clocktimizer allows you to build budgets and assign them to a case, and the true value of data in this instance is in the sophistication with which you can keep your budget on track. 


To learn more about creating budgets, view the following guides: 


Here are a few examples of the different fee arrangements and Clocktimizer tips on how to ensure you stay on budget and avoid another write off:


Hourly estimate

Fee arrangements made on the basis of an hourly rate agreed upon beforehand. 

Hourly estimate fee arrangement may work best in cases where it’s difficult to estimate the amount of work involved for example due to the legal complexity, or the result is quite unpredictable, or many different parties are involved and other reasons. 

Clocktimizer tips: 

  • Ideally the estimate is made on an activity or phase level to allow for better management of expectations and better monitoring of how likely it is that the estimate will be exceeded.
  • If you start working on the project before the scope is fully agreed, it may be useful to start building your budget top-down. In this case, switch off the “Calculate totals” feature. 
  • Set warnings when the estimated threshold is close
  • When the scope is agreed, set up warnings, to manage out of scope activities 
  • Set up warnings to stay on budget per scoped activities
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.



 


Fixed scoped

A Fixed Fee Arrangement is based on a fixed price for each stage of legal work.

Clocktimizer tips: 

  • Define the scope (is it hours per person, per activity, per task, per phase) and then enter the hours or fees agreed
  • Set up warnings to manage the total fixed budget 
  • Set up warnings to manage out of scope activities 
  • Set up warnings to stay on budget per scoped activities
  • Typically this type of fee arrangement has been thought out with seniority levels working on a specific task, so it is likely to set those as subcategories.
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.


 

Fixed portfolio

A fixed portfolio fee arrangement is based on a set single price for a large number of matters. In this type of arrangement the key to success is to have a large volume of matters, so that there will be enough wins to offset the potential losses.


Examples of portfolios:

  • all the matters for a certain client (we're working on a client budget, but for now you can use the matter grouping); or 
  • a specific group of matters for a certain client, in which case we would need to manage a budget on the basis of a matter group (i.e., a group of related matters if the grouping is maintained in Elite Enterprise or 3E).

Clocktimizer tips: 

  • Create a matter group in either Admin, Drilldown or Fee Comparison - How to create matter groups
  • Attached the matter group to the portfolio budget
  • If new matters are added to the portfolio, remember to update the matter group in Admin
  • Typically a matter would be used as a budget category to track how each matter is performing against the portfolio fee arrangement
  • Set up individual budgets per each matter in the portfolio for a more granular tracking 
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.

 



Fixed total

Under this type of pricing model, attorneys provide complete services for a specific project or case for a flat fee. 

To avoid projects ending up costing more than expected and jeopardizing profitability, this is only advised to be done, if one is really comfortable with the type of matter and is super efficient and doesn't do any work that was not envisaged, e.g. in practice areas offering a consistent price for commoditized and repetitive tasks.

Clocktimizer tips: 

  • Define the scope if possible (is it hours per person, per activity, per task, per phase) and then enter the hours or fees agreed
  • Typically this type of fee arrangement has been thought out with seniority levels working on a specific task, so it is likely to set those as subcategories.
  • Set up warnings to manage the total fixed budget 
  • Set up warnings to manage out of scope activities 
  • Set up warnings to stay on budget per scoped activities
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.

 

 

Retainer

A flat fee to be paid for a specific set of services provided during a set period of time. Portions of retainer fees may need to be refunded or transferred to a different period if services end up costing less than originally planned. 

General retainers are paid to an attorney for them to be available to perform services, while special retainers generally take the form of security from which payment is deducted as it is earned or an advanced fee for future work to be performed.

Clocktimizer tips: 

  • If the retainer fee arrangement is based on a fixed value per month for a number of months, set all the relevant months as budget categories
  • Set up warnings, to manage the budget and set alerts per each category to notify the client on the progress against the monthly retainer
  • If it’s a monthly retainer and you need to transfer the remaining value to the next month, remember to adjust the next month’s budgets
  • Define the scope for each retainer if possible and then set alerts to manage scoped and out of scope work
  • It might be helpful to set up a budget for each retainer for a more granular tracking
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.

 

Capped (total / scoped / portfolio)

This is managed in the same way as the fixed fee arrangements. Only the economic outcome is different (i.e. if fewer hours are spent on the matter, fewer hours can be billed).

Clocktimizer tips: 

  • Define the scope (is it hours per person, per activity, per task, per phase) and then enter the hours or fees agreed
  • Set up warnings to manage the total fixed budget 
  • Set up warnings to manage out of scope activities 
  • Set up warnings to stay on budget per scoped activities
  • Typically this type of fee arrangement has been thought out with seniority levels working on a specific task, so it is likely to set those as subcategories
  • Schedule regular budget status reports internally and externally to improve predictability and transparency
  • Schedule regular matter status reports to the client.