If I understanding things correctly, the basic premise behind value billing is that the fee for a matter is determined by the outcome and/or type of services the client wants and the significance (value) of that outcome to the client. However, this does not mean that the client is completely free to dictate the fee received for services rendered. Rather it falls upon the attorney to educate the client as to the value provided (Ron Baker, Pricing Psychology). It is suggested that the attorney establish some measure of value. In Value Billing – What is it, and how is it done, Allison Shields suggests that the attorney:

[D]iscuss the client’s current pain or challenge – in other words, what is it costing the client to do nothing? What will it cost the client if the client delays taking action? What opportunities might the client miss? Or what would it mean to the client to reach their objective? How will the result achieved affect the client’s business or personal life?

Now, for a business to remain in business, income must be greater than or equal to expenditures. Setting an hourly rate is, in essence, a simple matter of estimating: the hours that can be billed to clients over the course of a year, the expenses incurred, and the desired profit (rate = (expenses + profit)/hours). I submit that the value billing attorney must perform a similar calculus when trying to establish value provided, after all there are a fixed number of “things” that can be accomplished in a year and a known amount of income that must be generated. Continue reading →