Value Pricing Q & A: Retainers and Cost Assessments

Time SpentIf you agree to an "all you can eat" fixed arrangement with a client, i.e. to do everything the client wants for instance during a 12 month period for a fixed fee THEN, even with the client’s agreement, can you render monthly invoices for one twelfth of the total fee even if, in the month being billed, nothing was done? I have a perception that there is some regulatory/Law Society impediment. The regulatory requirements differ from State to State and country to country and you would therefore have to comply with what applies to you. In my opinion however, provided your client is aware and willingly agrees to a pricing arrangement for a service you are providing, it is properly documented and you meet the value you agree to provide in the course of that service you are meeting your obligations to that client and I cannot see any regulatory problems at all. Many businesses have a yearly fixed fee arrangement (retainer) with IT consultants for 24/4 technical support, even if you do not actually require the support. Health insurance premiums are not dissimilar. Again just ensure you properly document the agreement.

Do you have experience as to how courts assess costs when a client seeks assessment after the account goes out and you have, for example a $6,000 bill in value, when you ended up spending $2,500 in time to do the job? I am wondering if a substantially assessed value where the time required by the lawyer is minimal can land you in disciplinary proceedings?

Again, regulations and courts differ from jurisdiction to jurisdiction but provided you agree your terms and price up front, explaining to your client that you do not bill by time, you properly document the agreement and you provide the service why would or could they dispute the price? I know various regulatory requirements allow for time to be one factor an independent assessor can take into account but equally there are many other factors allowed for.

If you offer as an increasing number of firms do, a full service guarantee that is along the lines of “...notwithstanding the fee we have agreed, if you do not think for whatever reason I have provided the value to you or met your expectations, simply pay me what you think I am worth”, there can never really be a costs dispute to worry about.