As seen in Legal Dive: Charging a flat fee for legal work on contracts

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The contract management company Ontra believes its alternative fee approach better incentivizes lawyer efficiency and tech usage than the billable hour.

By Lyle Moran

Casey Shevin first joined the lawyer network for the contract management company now known as Ontra in 2015 to supplement her income as a family law attorney.

She said her positive experience working on non-disclosure agreements for two consistent financial industry clients has resulted in her remaining a member of Ontra’s growing team of freelance attorneys.

For Shevin, a major selling point has been Ontra’s model of having attorneys charge clients a flat fee per contract rather than billing by the hour as is common at most law firms.

She advocates for a flat-fee approach because it promotes attorney efficiency, clarity about the work to be completed and trust between lawyer and client.

“When you take away the billable hours, you really remove a lot of inappropriate incentives for lawyers and you really increase predictability for the client,” Shevin told Legal Dive.

Additionally, she said a flat fee model “really incentivizes lawyers to use technology that enhances their workflow.”

Reducing costs

Ontra provides its CLM software to its asset management customers in tandem with a network of freelance lawyers possessing contracts expertise, an approach its Vice President of Legal Partnerships Sara Eng has called “lawyer in the loop.”

Ontra’s flat fee per contract is based on contract type, as well as the client’s internal processes and the complexity of their negotiating positions. The flat rate is increased by a pre-set multiplier if a request for rush processing is made, according to Eng.

She said when Ontra’s flat-rate pricing model was created, the company put a lot of time into understanding their clients’ unique processes for completing deals in order to remove obstacles and automate as much work as possible.

“If you have a billable hour model, the customer is paying the lawyer to figure out all those internal processes along the way and do a lot of work that could be automated,” Eng said. “If you clear the runway first, you only have to pay lawyers for legal work and not all the other stuff.”

“This approach gets clients a better product that matches their “job to be done” — and provides transparent pricing on the final work product,” she added.

Overall, Ontra estimates it saves clients an average of 70% on legal expenses. For example, a law firm might charge more than $4,000 for work on a non-disclosure agreement compared to Ontra charging $400 to $500, according to a DealStreetAsia article published last year.

Eng said cost savings from using Ontra are paired with the quality of work clients would expect if they instead turned to a law firm.

Improved communication

Shevin, who is based in Massachusetts, said another reason she is proponent of charging a flat fee is that it promotes better and more focused communication between clients and their lawyers than the billable hour.

“For lawyers to do our best work, we want to promote the client sharing as much information with us as possible,” she said. “If a client knows that every time they pick up the phone or send an email, they’re going to get charged for that, they’re more likely to think, ‘Well, is that something I really need to share with my lawyer? Is that something I really need to ask them?’”

Disagreements about legal bills that can create tension between lawyers and their clients are also very rare under the flat fee model, Shevin and Eng said.

“You don’t get disputes over bills,” Eng said. “Everything’s really transparent. That’s a win-win for both customers and lawyers.”

Using tech and data

Shevin said the flat fee approach works well from a business perspective, particularly in instances where it is clear how long a project will take.

In her case, she has become very familiar with the length of time NDAs take to complete for her clients.

Utilizing the technology Ontra provides its network of lawyers has also helped Shevin achieve efficiencies in her work.

This includes using PDF converters and a searchable database of contracts she has worked on, as well as accessing DocuSign for contract signatures.

Eng said attorneys leveraging these tools helps them maximize their earnings potential, and Ontra plans to provide additional software to freelance lawyers to assist them in further optimizing how they spend their time.

“One of the things we think would be helpful for them is more business intelligence dashboards that show their client activity over time, including number of contracts, contract types, and the seasonality of their customers’ investment activity so they can manage their team’s time and capacity accordingly,” Eng said.

“So much of a solo or boutique law firm’s time is spent managing the business, so we want to provide data tools that will allow them to focus on the practice of law and servicing their customers effectively, rather than the administrative side of things,” she continued.

Hope for industrywide shift

Eng previously told Legal Dive that Ontra’s network has grown to more than 500 lawyers, a bump driven by 90% growth in headcount last year and 70% increase in lawyers so far this year.

Shevin said she has enjoyed being part of the expanding roster of Ontra lawyers, and she would like to see more lawyers across the legal industry shift away from the billable hour to flat fees moving forward.

“I think Ontra’s done a great job of helping bring a lot of lawyers into the more modern age, and I hope more people join us,” she said.

 

Read the original article published on September 9, 2022.

Ontra has a global legal network