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Can Document Automation Enhance Value-Based Billing?


Several years ago, I needed to take my car to a mechanic for a problem with the turn signal indicator. As it turned out (no pun intended), the lever needed to be replaced. The whole visit took under an hour, but I was a bit shocked when the bill for parts and labor turned out to be $300. I tried to suppress my irritation when I asked the lady at the counter why I had to pay so much for what was certainly an inexpensive part and a quick repair for the mechanic. She simply replied, "That's what the repair guide says to charge for this kind of repair." Not entirely satisfied with that explanation, I paid my bill and walked out feeling fleeced.

It wasn't until many years later – after I had graduated from law school and started working my first job in the legal industry – that I realized my experience from years earlier involved a form of value-based billing. In a nutshell (and this is perhaps an oversimplification), value-based billing revolves around the notion that a customer or client pays a fixed fee representing thevalueof the service provided, regardless of how much time and effort the service provider may require to perform that service.

I didn't understand it at the time, but the mechanic's expertise, experience and equipment enabled him to repair my car in much less time it would have taken me to do it. In retrospect, I realized I wasn't just paying for the actual time it took to make the repair; I was paying for everything the mechanic had at his disposal that I didn't.

These days, law firms and other professional service providers are employing value-based billing as an alternative to more traditional hourly or "time and materials" arrangements. From the client's perspective, the cost is known on the front end and it's irrelevant how much time or effort the attorney might expend performing the service on the back end. Consequently, the client often prefers such an arrangement for its transparency and set of clear expectations from the get-go.

But what about the attorney? What's in it for him or her? Value-based billing will only work for the attorney if he or she can provide the service asquickly and efficientlyas possible. This will require, of course, the attorney's experience, expertise and any "tools" the attorney might possess to leverage that experience and expertise in an efficient manner.

Consider the following: An attorney agrees with a client to produce a standard will and trust package for $500. If the attorney normally bills at, say, $250 an hour but it typically takes 4 to 6 hours on average to draft those documents using old-fashioned tools like cut/copy/paste (or even better but harder-to-use tools like Word merge templates), this is surely a losing proposition.

On the other hand, what if the attorney had a tool that enabled him or her to walk through an interview, answer a series of questions about the client's situation, and immediately thereafter producecustom, qualitydocuments withprecise, correct, legally validlanguage? And what if that whole process from start to finish took a fraction of the time it used to take doing things the old-fashioned way? Perhaps as little as a few minutes?

This is where an application like HotDocs comes into the picture. Its error-free efficiency enhances value onbothsides of a document production transaction through substantial time and cost savings. HotDocs therefore makes value-based billing a much more viable model for attorneys to employ in their practices.

Of course, the above scenario is just a simplified example and should not be taken as a precise accounting of the time and cost savings (otherwise known as "return on investment" or "ROI"). And to be sure, there will be an investment of time to transform existing legal documents into HotDocs templates — which will vary depending on the length and sophistication of the templates developed. But once that investment is made, attorneys, law firms and companies worldwide can leverage the power of HotDocs to enhance productivity, accuracy, and therefore thevalueof the services they provide.

HotDocs helps law firms across the world with value-based billing. To find out morepleaseget in touchorschedule a 30 minute demo.

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