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The Billable Hour vs Value-Based Pricing

Category: Blog, Build a Digital-First Culture, Build Better Habits Webinar Series, Implement Continuous Improvement, Practice Management, Webinar / Video 29th January 2026

In the first episode of series four of the Build Better Habits webinars, host Amy Bruce – Marketing Director at Osprey Approach – was joined by Simon McCrum, solicitor, former managing partner, and author of The Perfect Legal Business trilogy, and Scott Simmons, business development consultant at The Legal Business.

The panel tackled one of the most debated topics in the legal sector: billable hour vs value-based pricing. They explored how pricing models affect profitability, client experience, and law firm culture, and shared practical strategies for firms looking to adapt.

This episode covered: 

  • Why pricing is a critical issue for law firms today
  • What clients truly value and how pricing influences their experience
  • The pros and cons of billable hour, fixed fees, and value-based pricing
  • How to articulate value and overcome client pushback
  • Best practices for improving cash flow and profitability
  • The role of tech and AI in shaping future pricing strategies

Why pricing matters more than ever for SME law firms

Law firms face mounting pressure: rising costs, falling margins, and increased competition. According to the Law Society’s Financial Benchmarking Report, chargeable hours per fee earner are only at 70% of target, while costs per fee earner have risen by over 6%.

Simon began by stating, “Law has never been better, but the business of law has probably never been worse. Costs are going up, profits are going down. Something has to change – and pricing is one area where a real difference can be made.”

Scott added that pricing impacts more than revenue, “It’s the difference between a profitable business and burnout. It’s the difference between valuing what you do and undervaluing what you do.”

What do clients really value from legal services?

The panel agreed that clients care about outcomes, not hours. Scott explained,:

“Clients don’t value a lawyer’s time. They value results, expertise, and service. You can have a huge impact in five minutes and no impact in five hours.”

This shift challenges the billable hour model, which ties value to effort rather than results. However, Simon argued that some areas, such as litigation, make fixed or value-based pricing almost impossible:

“For complex disputes, uncertainty makes it hard to apply fixed pricing without inflating costs. Clients may end up paying for work that never happens. We need a pragmatic approach – fixed prices where possible, hourly rates where necessary.”

The pros and cons of pricing models

  • Billable Hour: Still dominant for unpredictable work. However, it creates pressure on lawyers and can distort priorities.
  • Fixed Fees: Common in conveyancing, wills, and employment contracts. Offers transparency but requires careful scoping.
  • Value-Based Pricing: Focuses on outcomes and client value. Reduces admin and time recording but demands confidence and strong client communication.

Scott emphasised that value pricing eliminates time sheets and improves client trust:

“Hourly rates are made up. Value pricing gives clients clarity upfront and frees lawyers from the tyranny of time recording.”

Webinar poll insights

During the webinar, 50% of attendees said they use a hybrid model, 40% rely on billable hours, and the remainder use fixed fees. Half of respondents are considering changing their pricing model, with challenges including time tracking, communicating value, client pushback, and admin burden.

Top habits for profitable pricing and great service

The panel shared six essential habits for law firms:

  1. Articulate your value confidently – Move the conversation away from price and focus on outcomes.
  2. Ask for money upfront – Improves cash flow and reduces lock-up.
  3. Leverage marketing and BD teams – Invest in brand-building and client relationships.
  4. Focus on existing clients – It’s 6–7 times cheaper to win work from them than new clients.
  5. Deliver a ‘Bentley service’ – Push cases forward and keep clients informed.
  6. Raise the bar – Do less work, better, for fewer clients at higher margins.

To hear Simon and Scott’s best practices for each habit, watch the full webinar here

Tech and AI: A game-changer for pricing

Both experts agreed that AI will reshape pricing models. Simon predicted:

“AI will reduce time spent on tasks, which should reduce client costs and improve efficiency. Firms that embrace this will gain a competitive edge.”

Scott warned that firms relying on hourly billing should be cautious:

“If AI halves the time tasks take, revenue could drop. Value pricing protects firms because clients pay for outcomes, not effort.”

Stay competitive with smarter pricing strategies

Whether you choose billable hour, fixed fees, or value-based pricing, the key is to align your model with client needs and business goals. As the panel highlighted, success depends on confidence, clarity, and delivering exceptional service.

For more exclusive advice and to watch the full heated debate unfold — including where our experts strongly disagreed on litigation pricing and the future of AI – watch the full episode on-demand now

In series four, we’re diving deeper into the four fundamental habits we believe every modern law firm should adopt: think digital-first, be client-focused, prioritise continuous improvement, and empower employees. This episode focuses on the second habit — being client-focused — through the lens of pricing strategies.