Abandoning business model of hourly rate charging

August 28, 2009

Azrights has now formally abandoned hourly rate charging. In future hourly rate charging for legal services will only apply in litigation cases where court rules make it difficult to avoid charging by the hour.

In all other cases the open ended time based charging system will be replaced with a new pricing model involving fixed fees, fixed stage fees, retainers, and subscription based pricing.

Clients dislike hourly charging because it is too open ended to allow for budgetary certainty. So, Azrights is introducing a novel pricing structure that encourages client communications, and allows it to give an all round better, more comprehensive service. For example, for the typical brand protection services that all small to medium sized businesses need, there will be four different monthly subscription services available to ensure the client receives comprehensive advice on their Intellectual Property Rights. The fees and scope of the work are known in advance, and are more manageable by being spread out over a period of time.

Although solicitors are required by professional rules to give estimates, some clients will consider estimates as the price for the job regardless, and become dissatisfied if it is exceeded. By charging on an hourly rate, the solicitor puts him or herself in a position of having to justify the time spent on the matter. This can be a considerable source of stress for the solicitor, and discourages the client from communicating with the solicitor. It’s natural that if you ring your solicitor and receive an invoice for the units of time spent on the call, you are going to think carefully about ringing them next time round.

The hourly rate creates the very opposite of the trusted business adviser relationship that Azrights wants to establish with its clients.