Geek Number 2 of the 3 Geeks and I were strategizing about our Crowdsourcing project over some adult beverages recently and got to philosophizing about alternative fees. Greg had posted a comment on my recent post about how things won’t change with current thinking. We ended up talking about how GCs (even when they’re insulted by the billable hour) always go back to the billable hour when evaluating firms’ prices. I commented about the FMC Technologies’ Value Challenge as an example, since that billing model is built on hours.

Then it occurred to me. We need a Fixed Fee Challenge!

I challenge clients to accept purely fixed fee bids for their work. In this challenge clients can’t ask how many hours will be used or what are the underlying billing rates. It’s been my experience on numerous alternative fee bids that clients always go to these issues. They’re concerned that they will pay too much. I have even heard of clients asking if they have to pay the whole fixed fee if a firm delivers results sooner than expected. So this challenge would force a client to evaluate price based on the overall fee and not hours or rates.

Of course ‘re-openers’ will be allowed. These are events that are outside the scope of the work that bring a client and firm back to the fee table. This falls within the Challenge, since a fixed fee would be for a defined project. Needs outside that project would be addressed separately. This is like the auto mechanic who gives a fixed fee for replacing the radiator, but can charge another fee when he finds the water pump has gone bad too.

I predict finding clients wiling to respond to a Fixed Fee Challenge will be more challenging than finding law firms willing to respond to a value challenge. For once though, it would be nice to be wrong.