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Message: Hi, I thought you might be interested in this article I found. What You Get Paid For The International Space Station is orbiting the Earth and the computer in Mission Control that regulates the oxygen regulator up in the spacecraft has broken. It needs to be fixed or the three astronauts conducting experiments in space will suffocate. Joe Jamoke is in charge of computer repairs at NASA and he calls Acme Computer Repair to come out and fix the problem. The Acme guy arrives, walks up to the computer and lifts the cover. He eyeballs the situation, reaches into his bag, and pulls out a screwdriver. He snakes the screwdriver into a tight crevice and tightens a screw that has become dislodged. After removing the screwdriver, the repairman puts the cover back on the computer, flips the switch and the machine immediately lights up and begins to function as it should. The repair man writes up an invoice and hands it to Joe. Joe is shocked to see that the bill is for $1,000. He turns to the repairman and says: “This bill is outrageous. You only turned one screw. How can you charge this much for so little work?” Before the repairman can even answer, Joe continues his rant. “The only way this bill will ever get approved is if I have an itemized invoice to present to my boss. Please write up an itemized invoice.” The repairman sits down and writes up the invoice as requested. He presents Joe with a new bill. It reads: Invoice for Services Turning One Screw…Fee = $1 Knowing Which Screw to Turn…Fee = $999 Total…$1,000 In the example above, the repairman did not get paid for the amount of time he put into the job. He got paid for the value he provided. This value came in the form of his expertise at repairing sophisticated computer equipment. The fact that the repair was done in a short period of time was probably advantageous if only mildly relevant. In this scenario billing by the hour or billing by the actual work performed would have been inappropriate. The only appropriate way to bill for the service rendered was value-based billing. The situation described in this fictitious little scenario is identical to the situation most lawyers find themselves in everyday. The service they deliver to their client has significant value but they charge for the amount of time they spend actually doing the work. Most lawyers do this because they do not know how to properly bill for their services. If you are one of those lawyers (an hourly billing lawyer who cannot figure out how to straighten up and charge an honest fee) I am going to give you a tremendous gift. I am going to introduce you to a process that will help you determine how to bill a fair fee and have clients love you for doing so. Step One: Become a Recognized Thought Leader This simply means packaging your knowledge, talent, skills and experience and showing the prospective client how it differentiates you from everyone else who does what you do. You can do this by writing and publishing papers, speaking at industry conventions, being quoted in the media, teaching college courses, etc. Step Two: Assess the Situation and Determine the Value of the Solution to the Client Will the client avoid a potentially significant legal judgment if you negotiate a settlement? Will the agreement you draft protect the client from financial harm? Does the contract for that $2 million dollar property insure that the client owns the air rights above the building as well? All of these things are valuable. Interview the client and have him put a dollar value on the benefits of the matter at hand. Step Three: Present Your Fee as a Fraction of the Value Provided Be careful in this step. I am not talking about charging a contingency fee. I am talking about a comparison between the value of the potential outcome and the amount you charge the client. Example One: The client needs a contract to purchase a $20 million asset. Lawyer charges $80,000 to negotiate and draft the agreement. The lawyer has done this two dozen times. He is a true dealmaker. The fee, which is less than one half of one percent of the total deal value is good for both parties because there is no incentive to spend any more time than is necessary working on the matter. Example Two: A client hates his wife. He wants his marriage dissolved as quickly as possible. He has significant assets but the laws of the state of residence are clear on spousal maintenance and asset division. The lawyer he selects is excellent at negotiating divorce settlements in an acrimonious setting. Speed of resolution has enormous value for this client. He happily pays $50,000 to get the divorce finalized within 90 days. Example Three: A radio personality on a Christian Fundamentalist station is arrested and charged with DUI. If convicted, he will lose his job and possibly never work again as he is renowned for his position of moral superiority. He hires a former prosecutor who understands the flaws in the alcohol detection equipment and police procedure because he spent 15 years prosecuting these cases. Retaining this lawyer and possibly getting the charges dismissed is highly valuable to the client because his seven-figure income is dependent upon his exoneration. There are scenarios in your daily work that can productively apply a value based billing model. In fact, let me be perfectly clear: There is NO scenario…none…in which a value-based billing model is NOT applicable. The challenge for you is not IF you can make value-based billing work in your practice, the challenge is WHEN you will make it work in your practice. One thing I know is absolutely true: You have a competitor using value-based billing right now to sign up cases you deserve. Stop punching a time clock. Isn’t it time you get paid for the value you provide? Link: http://www.rainmakerlawyer.com/site/permalink/what_you_get_paid_for/