13 Dimensional Pricing

Hat tip to Simon Tupman for sending me the new regulations from the New Zealand Law Society, part of which deals with fees.

As is typical with regulations, the wording is turgid, dry, and not at all comprehensible. But it’s Chapter 9 (page 18) that caught my eye, since it’s very similar to the ABA’s Model Rules of Professional Conduct, Rule 1.5 on factors that make a fee “reasonable.”

While the ABA’s Rule lists eight factors to consider in determining if a fee [I sure wish they’d use the word “price” instead] is reasonable, the New Zealand rules lists thirteen.

Either way, they both go way beyond “the time and labor expended.” I especially love this factor to consider from the New Zealand rule:

The degree of risk assumed by the lawyer in undertaking the services including the amount or value of any property involved.

Risk is incredibly important in determining price, probably more so than scope, according to Ed Kless in this post.

What’s amazing, though, about all these pages of rules on fees is that they could be replaced with one sentence:

You should price all of your work up-front, agreed upon by the customer in advance, and utilize change orders for when unexpected items arise—again, approved in advance by the customer.

Or, more simply put: capitalist acts between consenting adults.

Some answers are simple; it’s the fallacies that get complicated.

Billing by the hour is an enormous fallacy, requiring page after page of rules, regulations and interpretations not needed in any other business on the planet.

Amazing. I wonder if lawyers will ever learn?

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