Reconsidering the Billable Hour Model
Jim Field • August 27, 2025
Reconsidering the Billable Hour Model
The billable hour isn’t dead, but it’s on life support.
Corporate clients have question hourly billing for years, but today even individual and small-business clients expect predictable costs and straightforward pricing.
With the growing use of AI, clients expect efficiency gains from technology to be reflected in pricing.
Change is also being driven by the rise of Alternative Legal Service Providers, which offer lower fees and predictable billing.
The Market is Shifting
A recent survey found that 70% of law firms now allow clients to negotiate flat fees for at least part of their services. Clients are demanding alternatives, and firms are responding.
Flat fees are just the beginning. The real transformation comes when firms experiment with pricing models that tie cost to value instead of time.
Beyond Flat Fees
Value-based pricing is a more sophisticated evolution. This approach ties price to the client’s perceived value of the outcome.
Other models, like subscription-based services, blended rates, and hybrid approaches, are also gaining traction. These options combine predictability for the client with flexibility for the firm.
Alternative pricing options give clients what they want, stabilize a firm’s cash flow, reduce collection problems, and align incentives around efficiency and results.
Beginning the Transition
Shifting to a new pricing model can feel daunting. But the smartest moves are usually gradual and data-driven.
Review your time-tracking data to see which matters are most profitable and which consume the most effort with the least return. Then examine your workflows. Where can efficiency be improved through process changes or technology? Alternative pricing works best when the firm is confident it can deliver quality results without wasted effort.
Consider piloting a new model. You might test a flat fee or subscription option with one practice area or a specific client segment. That enables you to gather feedback and refine your approach.
The Take-Away for Firm Leaders
The key question is “How do we build a pricing model that creates long-term stability and client loyalty?”
Done well, alternative billing can open the door to stronger client relationships, healthier firm culture, and a steadier path to growth. Firms that embrace these models will be positioned not only to survive the current transition, but to lead in the next era of legal services.
Client intake is your first, and sometimes last, impression. For many small law practices, intake is where potential clients decide whether to move forward or move on.
Across the U.S., small law firms are confronting challenges that, until recently, were the exclusive domain of large firms. Increased client expectations. Rising technology demands. Talent retention pressures. Competitive threats from startups, PE-backed legal shops, and AI-first players.