Fixed Fees and A Long Cold Winter

We’ve been using fixed fees for many years. We don’t employ hourly billing at all. It works out pretty well for us and for our clients.

I’m not saying it’s perfect. But, most of our clients find it appealing and we’ve adjusted to the issues it creates.

One of those issues is coming up soon, in December.

December isn’t great for a family law practice built on fixed fees. The majority of our revenues are generated by new clients (a smaller portion comes from ongoing fixed fees for litigation matters). December is usually our slowest month of the year for generating new clients.

Why?

Well,  we close for several days in December for the holidays. Additionally, most folks are hesitant to start their divorce in the midst of the holidays. They want to wait until the new year starts so they don’t disrupt family gatherings or ruin the holidays for the children. You know the drill. Our revenues are usually about 20% lower than than in a typical month.

Unfortunately, our bills don’t take a break in December. Payroll is about the same, as are rents, phone bills and all the rest.

How do we cope? It’s challenging. We generally work to set aside cash throughout the year in anticipation of the change. We also have a credit line with a local lender that we can turn to if necessary.

Additionally, we become very conscious of the impact of the holidays. We watch our expenses very carefully and we stay on top of the collection of ongoing payments.

The key to managing December is awareness. We’ve got to plan for the shortfall and be prepared. Fixed fees bring a lot of good things – increased cash flow – happier clients – easier forecasting – but they also brings some challenges.

Related posts:

1. Is December The Only Month When Your Financial Data Makes Sense?
2. How to Grow Your Practice Over the Holidays
3. My Greatest Fear
4. Do You Know Your Numbers?
5. 3 Things to Do Now for a Great 2010

Post written by Lee Rosen on November 4, 2009 in Finance