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What is a Privacy Policy?

What is a Privacy Policy?

Website privacy policies can be complicated to draft because of several factors. You will have to juggle legal requirements, as well as the audience’s understanding of privacy and website functionality. Thus, a generic document or a website privacy policy template is not going to cut it.

Additionally, a privacy policy is not static. The importance of frequent updates is huge, yet many website owners think it’s a one-time thing that will never have to be addressed again.

A privacy policy for a website is probably one of the most crucial documents to have. Here are a few of the key reasons why.

The privacy policy provides comprehensive information about how user data is going to be handled. It should outline everything that the website uses such data for.

In essence, you’ll be letting website visitors know:

  • What types of data the website is going to collect
  • How this data is going to be used for the purpose of providing the website’s content or services
  • What steps are undertaken to protect the data

Website privacy laws do exist. Some of the most important regulatory documents in the US include:

The Federal Trade Commission is the entity that regulates data privacy provisions and protections. It regularly issues guidelines that have to be followed for the purpose of drafting comprehensive website privacy policies that adhere to legal requirements.

Reasons Why Your Website Needs a Well-Written Privacy Policy: 

Website privacy policy laws mandate the inclusion of such a document if you collect personal data from your users. To ensure regulatory compliance, you need to have a comprehensive privacy policy that addresses the specific type of data collection and the protections available on your online platform.

There are several additional reasons why a well-written privacy policy should be uploaded to every single website.

  • Many third-party service providers may want your website to have a privacy policy. Google Analytics is just one example of such third-party applications. 
  • Users will also be interested in seeing whether your website offers such protection. While in the past most people weren’t concerned with privacy policies, recent data leak scandals have started to shape up new attitudes. According to an interesting poll presented by eMarketer, 84 percent of questioned individuals worry about their privacy when engaging in online activities.

A good privacy policy builds trust:

It encourages visitors to explore your website and in this way, it can potentially boost engagement. If you are interested in the long-term success and monetization of your online project, the drafting of a privacy policy should be at the top of your to-do list.

To fulfill the legal requirements and to have a perfectly customized privacy policy for your website, you can’t just copy and paste the document privacy policy templates are not a good pick either. Consulting an experienced privacy policy lawyer is the best strategy for helping you fulfill all legal conditions while also getting a custom-made document based on your content and services.

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Legal Checklist For An Online Startup

Legal Checklist

Forming a new business is an exciting adventure. However, the dream of self-created success and wealth can sometimes cause new business owners to overlook the essentials of creating a new business. These overlooks can potentially cause serious harm down the road. This legal checklist, while not exhaustive, is meant to help new business owners ensure that they maintain compliance and protect themselves from any mishaps. 

1. Find A Business Structure That Best Fits Your Needs: 

Prior to forming your new business, you should first work with a legal professional to determine which business structure would work best to fit the needs of you and your company. Some of the more common structures include LLCs or C corporations. 

2. Protect Yourself and Your Intellectual Property:

 Work with a legal professional to determine if you should file for a copyright, trademark, patent, or any other form of intellectual property. Such protections will work to ensure that your idea cannot be stolen by another. This is of particular importance for online startup companies, as the business is exposed to innumerable others. 

3. Money Management: 

Once you have settled on a business structure, work with your professional to determine what your tax obligations are. It could be a bad start for your startup if the IRS begins to focus on you for improperly filing taxes. 

You will also want to create a separate bank account for your company money. This should be kept completely separate from all personal accounts and funds. Co-mingling personal and business funds could cause serious issues down the road.

4. Take Care of the Technicalities: 

Online startups have an additional responsibility to maintain compliance with internet standards, while protecting the company at the same time. This will require the new business owner to work with his or her legal professional to draft privacy policies, disclaimers, and terms of service. It is also very important that you adhere to those policies that are put into place. 

New business owners will also need to work with their professional to incorporate all necessary licensures. Many jurisdictions impose severe fines if companies fail to maintain required licenses. 

5. Create Strong Contracts: 

There are three main types of contracts that new businesses should work with a professional to implement. The first of these contracts is a Non-Disclosure Agreement. These agreements work to protect confidential information from being released to the public. Not all businesses require non-disclosures, but they are highly important for those that do.

The second type of required contract is an employee contract (if you have anyone working for you). Employee contracts should outline the rights and responsibilities of those working, as well as the appropriate and expected conduct.

Finally, business owners should work with a professional to draft a Buy-Sell Agreement. Such agreements detail what would happen in the event of an owner or founder choosing to leave or dying. Specifically, these agreements details how much money should be paid out and what would happen to that person’s stake in the company.

While the above list is not exhaustive, it’s a good start for online startups to utilize in order to create a successful business. It should be noted that the critical point in all of the above-listed points is that startups should always work with a legal professional to ensure compliance.

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Do I Need A Freelancer Agreement?

Freelancer Agreement

Do I Need A Freelancer Agreement?

We’re living in the age of the gig economy, and the solo-prenuer is its champion.  More and more Americans are kissing the 9-to-5 day at the office goodbye and putting their creative passions to work on a project-by-project basis instead.

It’s an exciting time to be an independent worker. But because freelancers are on their own, they must be their own best advocate when it comes to administrative responsibilities.  Without the benefits of a human resources manager or accounts payable team, it is imperative that today’s freelancer enter into an enforceable written agreement with each new client in order protect their interests and get paid.  While these types of contracts may vary from industry to industry, below are some basic recommendations as to what should be included in a freelancer agreement. 

Rates or fees for services:  

Most freelancers have at least one story about the time that they didn’t get paid for the work they completed and how they wished they had a signed a freelancer agreement. Regardless of the type of work requested, it’s important to include a section on pricing and payment schedules. Make hourly rates and flat-fee costs clear. If charging by the hour, consider including a minimum and maximum work-hour clause. For example, “Project Artwork won’t take less than hours and no more than Y.” The X is for the freelancer’s security – these hours will be billed even if the project finishes early. The Y is for the client’s security. The client will pay no more than Y no matter how long the job takes.  Spell out a payment schedule, too. Explain whether payment will be made by check, PayPal, or credit card. Without explaining pricing and payment, freelancers run the risk that a client might misunderstand how much he owes, or worse, debates paying the full price at the end of the project.

Deliverables:

Deadlines are important to clients, and having an agreed-upon delivery date in advance for the completed project and/or stages of the work can thwart potential frustration and disconnects. Expect the unexpected, and factor in a cushion of extra days—or even a week—longer than anticipated to help alleviate stress. And if the extra time is not needed, then turning in a project early impresses clients and may lead to more assignments.

Revision limits:

Savvy freelancers know the dangers of “scope creep” and take care to limit the number of revisions they will complete.  It’s natural that, from time to time, clients will request changes to draft work, and that’s okay. But without specifying limits upfront, a project may take far longer than expected. This decreases profit margins, impacts work on other projects and may cause a freelancer to turn down new assignments.  To keep expectations clear, offer one or two revision rounds as part of the fee, and bill anything above and beyond that as extra.

Confidentiality:

If a freelancer or contractor is going to have access to secret company information, include a confidentiality or non-disclosure clause in the agreement.  Many clients will require this. These clauses provide penalties for breaching company privacy or using the company’s own trade-secrets against it.

Cancellation clauses:

Freelancers and clients enter into agreements with the goal that everything will go as planned. But life sometimes gets in the way. Include a provision explaining what happens if the freelancer or the client cancels the project before it becomes due. The point is to deliver some form of compensation on the work that the freelancer has done but won’t be put to use.

Copyrights:

There are different copyright options available depending on the type of freelance work. Writers have the most copyright options such as first serial rights, print rights, electronic rights, and several others. For most freelancers, it boils down to owning the rights until the final payment is made. Copyrighting work is a must to avoid having a client run away without paying or using the work without permission. But it’s also a form of protection for the client. If they have made full payment, they have already bought the copyrights and should expect to not find the work done anywhere elsewhere.

Find better clients:

Finally, freelancers find and keep better clients when they put their agreements in writing. Prospective clients recognize professional freelancers and respect that they command professional rates. A written agreement also helps to weed out low-payers and contract-shy, suspect clients. While creating a contract might seem like a formality, in the long-run it helps build a better reputation and relationships: as soon as a freelancer makes it a habit to engage prospects with a written set of do’s and don’ts, he begins to attract higher quality, higher paying clients.

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What Is DMCA And Does It Apply To My Business?

DMCA-DMCA-RIghts

What Is DMCA And Does It Apply To My Business?

If you are more or less aware of digital trends and developments, you have probably heard about the war that Taylor Swift declared on YouTube. This is one of the most prominent examples of a DMCA claim and its consequences.

To get a better idea of how DMCA applies to your business, it’s important to take a look at the definition and the current DMCA laws.

What is the DMCA: A Quick Overview

DMCA stands for Digital Millennium Copyright Act. Enacted by Congress in 1998, the act was one of the biggest modifications to the US Copyright Act. Such changes were needed to protect intellectual property (copyright) in the face of new interactions stemming from the use of internet-based communication channels.

Having a DMCA policy on one’s website is a really good idea. Very often, it’s not featured individually but rather included in the website’s terms and conditions. (See here for questions about Website Terms and Conditions) The clause outlines how the company will respond to take-down notices for the removal of copyrighted material from the website. 

Standard DMCA policies provide information about what a copyright infringement is, how a claim can be filed in the case of a DMCA violation, and what information a claim should include.

Protecting Your Own Copyrighted Work:

When looking at what a DMCA is, it’s also important to point out that it protects your intellectual property against copyright infringement. If you discover that somebody has been using your content without permission, you can file a DMCA claim. A DMCA notice needs to be filled out correctly in order to be valid. DMCA law suggests that the notice should feature the following elements:

  • The physical or electronic signature of the copyright holder
  • Identification of the copyrighted work and the infringement that has occurred, as well as the place where the copyrighted work has been published (a website, YouTube video, social media post, etc.)
  • The contact information of the copyright holder
  • A statement on behalf of the copyright holder that explains the respective use has not been authorized
  • A signed statement that the information included in the DMCA claim is accurate

The Importance of Ensuring DMCA Compliance:

Due to the fact that more and more online platforms allow for user-generated content to be uploaded, DMCA claims are proliferating. A part of the DMCA policy is to offer the platform protection against claims that result from content uploaded by a third party.

Take-down letters can still be sent to website owners for the purpose of removing the copyrighted material. The online platform, however, is exempted from liability whenever there’s no knowledge or intentional abuse that the material was copyrighted by someone else.

Both copyright owners and web service providers can find it difficult to navigate the DMCA clauses. In such instances, a consultation with an experienced legal professional will be of paramount importance. Through a legal consultation, both copyright protection and DMCA exemptions will be explained and understood much better.

If you don’t know how to address copyright issues or how to craft a DMCA clause for your website, get in touch with a lawyer that specializes in intellectual property. A single consultation will be sufficient to answer your most pressing questions.

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What Are Website Terms and How Do They Protect Your Business?

Website Terms

While most people will skim through terms and conditions (at best!), having such a page on your website is of utmost importance.

The specifics depend on the website niche, the types of information, and the functionalities that the website gives access to. Legally speaking, terms and conditions are rules by which website visitors have to abide in order to access the respective content or service.

Website Terms and Conditions: A Brief Overview:

So many website owners do not put a lot of thought into crafting the terms and conditions page. In fact, they opt for a generic template – a serious mistake. The respective page is important because it can limit your liability in case a visitor or a customer may be considering taking you to court. Its purpose is to also protect the content and suggest permissible uses. Whenever a legal issue occurs, a court will examine the content of the terms and conditions page to determine its comprehensiveness.

The content of the document will vary from one website to another. Some of the most common topics that website terms and conditions may cover include:

  • Content copyright information, a definition of misuse
  • A disclaimer of liability
  • A use clause
  • Privacy policy
  • Governing law under which the usage terms and conditions are crafted
  • A statement about accountability for online actions and behavior
  • Payment details (for memberships, services, in the case of an ecommerce website)
  • Opt-out policy

Reasons Why a Website Needs to Have a Terms and Conditions Page:

The biggest question here is whether website terms and conditions are enforceable. The answer is that it depends on the circumstances. A court will examine situations on an individual basis, which is why having detailed terms of service is always a smart thing.

The page is, in essence, an agreement. It establishes the rules that website visitors must follow when interacting with the respective online platform. When the rules are clearly outlined, abusive behavior can be sanctioned. Such abusive behavior could consist of spamming, posting racist content, copying content from the website, etc. On the basis of these rules, a website administrator can terminate accounts without prior notice. When a website visitor fails to follow the established protocol, the termination clause of the usage agreement can be invoked.

A Website Terms And Conditions Are Crucial For Limiting Liability:

A disclaimer typically states that the website owner cannot be held accountable for errors, outdated information, information published by website visitors, and readers taking information out of context to use it for a specific purpose.

To accomplish these goals, you cannot rely on generic terms and conditions, or on a text that is copied from another website (unfortunately, a common approach that many website owners adopt).

In order to experience the full range of protection, you need a page that is entirely crafted for the needs of your business and the purposes of your website. Working with a  terms and conditions specialist attorney can give you peace of mind and the knowledge that all of the essentials have been covered.

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Best Practices For Your Company’s Social Media

Best-Social Media-Practices

Facebook, Twitter, Instagram, Snapchat, LinkedIn, Pinterest, the list goes on and on and on. The reality is that the vast majority of Americans spend a considerable amount of time online, so much so that the average consumer is constantly bombarded by information.

For a business, standing out in social media requires some skill, a little luck, and implementing the industry’s best practices. Below are some recommendations for optimizing your online presence, building trust with your audience, and ultimately converting clicks into profit. 

Respond promptly:

Customers have expectations for quick responses, especially when it comes to complaints. Negative feedback must be addressed, especially in a public setting. Acknowledge the hurt feelings, tell the customer how much she is valued, and offer a solution. Then try to take it to a private message as quickly as possible and resolve it there. Be genuine and sincere. And whatever the feedback, always try to respond back to it, even if it is as simple as saying “thank you.”

Blessed are the brief:

The scarcest resource of our time is “time.” Twitter’s popularity lies in its brevity and 140-character limit. People no longer have the luxury (or the patience) of reading a long article. Consumers want brief, to-the-point, striking content. Pictures and engaging, snappy captions are best. Ideas for longer posts don’t belong in a Facebook status update. Keep them for a blog on the company’s website.

Maintain engagement:

When creating social media posts, give people something to talk about. Today’s social media user is looking to be a part of the conversation. We all want to feel included. Ask questions and post content consumers are interested in, related to the business. For example, a donut shop might post a poll asking customers about their favorite donut flavor. Or an accounting firm can upload a screenshot from a scary movie and write below, “Don’t be afraid this tax season. Come visit us at Acme CPA.” Engagement can be about news, the company’s industry, photos, info-graphics, promotions or questions. The options are endless.

Call-to-action:

Regularly posting on social media and engaging with customers on social media is a great place to start. But to really see success, companies should be providing users with information on the right action to take, based on your post. That could be as simple as asking them to share, retweet, or comment. Or maybe ask that they try a featured product, or directing them to the company website. Whatever it is, be sure include a call-to-action on social media posts. Let consumers use their network to expand the organic reach of social media. Give them a reason to mention the company brand and refer others to the business.

Respect intellectual property rights:

From a practical perspective, organizations should be mindful and vigilant that content being posted does not accidentally infringe on another person’s intellectual property rights. This could expose even the smallest mom-and-pop store to legal liability. Nevertheless, copyright laws allow for the “fair use” of copyrighted material without securing the owner’s permission. This type of exception allows anyone to use the copyrighted material of another for use such as criticism, comment, news reporting, teaching, scholarship, or research. However, the first factor used to determine whether the use of another’s copyright falls under this exception is whether the use is for commercial vs. non-profit educational purposes. Accordingly, businesses should be careful relying on the protection of fair use when using another’s copyright.

Automation:

Running a social media program can be incredibly time-consuming, but one way to save time is to automate parts of the process. Even small businesses and start-ups can pre-schedule social-media message and posts and re-share content at optimal times. There are several free and inexpensive programs available.

Behind-the-scenes insights build connection: 

A great benefit of social media is that it allows the audience to get real-time access as to what it’s like to be a part of the company. This type of intimacy helps boost loyalty, which is turn, boosts sales. Consider posting about office dress up days, major milestones, job postings, events, and fun, goofy comments made around the water cooler. 

Consistency is key:

Finally, social media is a social endeavor in and of itself. A company’s team should be involved in the conversations, but publicly it should speak with one voice. Limit the number of people with access to the social media platforms. And anytime someone with access leaves, immediately change the passwords.  Because while it’s great to give life to a brand on social media, once something is posted, it can never be truly deleted.

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How to Protect Your Online Intellectual Property?

Protecting Online Property

How to Protect Your Online Intellectual Property?

Does this scenario sound familiar – you’re browsing Facebook and you suddenly see a video that you made for your website, but it’s published by somebody else who claims that they created it? Copyright infringement in the digital realm is an incredibly common occurrence, and most content creators have had some experience with it.

There’s still a common belief that if something has been published online, it’s free to copy and use. This is not the case. If you’re wondering how to copyright website content, the following guide will acquaint you with the essentials.

Website Copyright and Intellectual Property Laws

To protect website content, you’ll first have to understand whether there are legal provisions for creators like you.

Copyright protection arises as soon as a creator finishes working on the respective work. There doesn’t have to be a copyright symbol for intellectual property laws to become enforceable. These laws also apply to all content types in the digital realm – from blog posts and complicated infographics, to interactive multimedia and pictures.

It’s illegal for somebody to just take your content and publish it on another website.

The same applies to non-digital content published online. If you write a book and decide to upload a PDF to your website, the book will be protected.

One of the most important laws offering protection to digital content is the Digital Millennium Copyright Act (DMCA). According to this law, all materials published online are protected by US copyright law.

How to Copyright Blog Content and Other Digital Materials

Whether you need to protect website content or copyright images online, the procedure to follow will be one and the same.

While content creators do benefit from automatic copyright protection, a copyright notice that also highlights fair use practices should be drafted. For best results, you may want to have a website footer appearing on every single page. The footer should state the year and the fact that all rights are reserved.

Pursuing Copyright Infringement

Knowing whether your content has been stolen is not an easy task. Often, infringement will be difficult to identify.

Using Google Analytics to determine what your most popular content is, you can perform occasional checks. Tools like Copyscape make it possible to paste the text and see whether it appears on websites other than yours.

In such instances, you will have to submit a DMCA takedown request. Such a notice will typically be made available via a hosting service provider. You can also submit a Google DMCA take down request.

While this is happening, take screenshots and collect evidence. On occasions, it may be impossible to get assistance from the hosting company, or it may be located in another country where other jurisdictions will apply.

In such instances, you may have to take legal action against the entity that has stolen your content.

Pursuing legal action should be a last-resort option because this process may be lengthy and cumbersome. Usually, copyright infringements will be resolved before it gets to that point. If you contact the respective website owner or manager, chances are that they’ll take down the stolen content sooner or later.

If you want to start a lawsuit, make sure that the damages will outweigh the cost of the legal proceedings. Consulting with an experienced attorney may shed more light on the specifics, and help you decide which path to choose.

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Removing Negative and Defamatory Content from a Site

Removing Defamatory Content

Removing Negative and Defamatory Content from a Site

As social media and innovative digital channels have come into existence, people have had to deal with issues like negative comments and even online defamation. While there aren’t official statistics in the US, online defamation grew 23 percent in the UK in a single year as a result of digital communication.

Online defamation law makes it possible to get sued over comments published on your website or social media profiles. At the same time, many website owners are hesitant about content removal because such interventions do affect the freedom of expression.

If you have a website or any other type of online presence, you will have to deal with negative or defamatory comments sooner or later. Here’s how to handle the task in the best possible way.

Online Defamation Laws

While defamation regulations are pretty much straightforward, cyber defamation is more difficult to address. The manner in which online comments are handled will depend upon your location, the location of the commenter, and whether their identity can be pinpointed.

Things become even more interesting when you add the Communications Decency Act to the mix. The act exempts website hosts and ISPs from most defamation cases. Thus, website owners and bloggers will be the ones who will typically be forced to deal with the situation.

Content Removal to Deal with Defamation: How to Do It Properly

Defamation online can be widespread because of the sense of anonymity people get in their digital communication.

As a website owner, you have the right to deal with negative, racist, sexist, or otherwise unacceptable or illegal comments. To give visitors a good idea about what’s permissible and what’s not, you should have a well-drafted terms and conditions page http://sareenlegal.com/website-terms-conditions/

Even if the website provides visitors with an opportunity to write comments, blog posts, or share any other type of content, such activities should be controlled via a set of rules aimed at ensuring quality and reducing the risk of online defamation.

The Communications Decency Act does offer a range of protective provisions to website owners. Still, you may experience problems as a result of:

  • Intellectual property claims whenever something published on your website is copyrighted
  • Specific encouragement of the publication of defamatory or illegal content (in this instance, CDA protections will not apply)
  • Creating content that is illegal or defamatory
  • Committing a violation pertaining to state or federal criminal law (especially when a comment or a piece of content relates to either the exploitation of children or obscenity)

Authors are not protected from liability under CDA. This is especially true when the identity of the author can be verified. In such instances, it would be best to communicate with the respective person and ask them to remove the defamatory information voluntarily.

If it’s not possible to get in touch with the author or they refuse to take down the content, a website admin should go ahead to remove the respective text, image or video. This is completely permissible if the website’s terms and conditions outline the procedure and the situations in which it’s going to be enforced.

When you fail to do the right thing, you may face more serious consequences. It’s possible for a person affected by defamation to obtain a court order for the removal of a particular URL from online searches. As a result, you may lose traffic and experience problems with website development. To avoid such complicated legal scenarios, it would be best to address online defamation on your own.

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What Is Copyright Fair Use?

Copyright-fair-use

Copyright laws protect individuals from having their work replicated and further distributed without their consent. In the U.S., a copyright is a legal entitlement that grants exclusive rights to the maker of an original work—such as a literary work or a piece of computer software. 

When an individual decides to replicate or distribute a work despite its copyright, it is called copyright infringement. Copyright infringement is undoubtedly against the law. However, there are some instances where a portion of an original work can legally be utilized without the permission of the owner.  This is called fair use.

Why doesn’t fair use violate copyright mandates? For a use to be considered “fair”, the original work must be transformed into something novel. This idea is called a transformative purpose.

The Four Factors that Determine Fair Use:

There is not a mechanical definition that renders a use “fair” or “unfair”. However, Section 107 of the Copyright Act proposes four factors that should be considered when evaluating a question of fair use:

  • Purpose and Character: Is the work being used for commercial or for-profit means? Or is it being used for non-commercial or educational purposes? The latter variety is more likely to be considered fair.
  • Nature of the Original Work: Was the work being used as a piece of creative expression, or more so technical-factual? A more creative work (like a song or short story) is less likely to support a claim of a fair use.
  • Amount: How much of the original work is being used? If the use includes a large portion of the copyrighted work, fair use is less likely to be found (although there are exceptions, such as parody, where large pieces of the original are used with no repercussions).
  • Effect On Market: What were the consequences (for the original) of the supposedly fair use? To what extent, if any, did the unlicensed use affect the existing or future market for the owner’s original work?

This is the framework invoked when deciding the fairness of a use. You’ll notice that these four factors are rather ambiguous. This was likely done intentionally so that instances of fair use could be determined on a case-to-case basis.  

Here are a few common examples of original material that is legally reused via the principles of fair use:

  • News Reporting
  • Research
  • Parody
  • Criticism
  • Commentary
  • Scholarship

Be advised, however, that it’s nearly impossible to determine when a use is actually fair use, and it’s best to not skirt on that side of the law.

The Bottom Line:

 Copyright laws protect the owners of original material. However, there are ways to utilize copyrighted works legally without permission. This is referred to as fair use, and usually involves the transformation of the original into something new and different. When courts review the fairness of a use, they consider the purpose of the use, the nature of the work being used, the amount of material used, and the effect of the use. When in doubt, contacting the owner of the original is always the best way to go. If the owner is unavailable, consult a legal professional with experience in intellectual property or internet law.  

It’s wise to discuss the legality of your planned use before using an original work. Consulting an experienced attorney may save you legal trouble and statutory infringement penalties in the long-run.

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The Evolution Of The Legal Model: Why Billable Hours No Longer Work

Billable Hours And Flat Fees

The Evolution of the Legal Model: Why Billable Hours No Longer Work

Over the past few years, several reports have proclaimed boldly that the billable hour is dead in the field of legal services. Has this billing method really become obsolete, why and is there a better alternative out there?

Reasons Why the Billable Hour is Becoming Obsolete

In order to be profitable, a law firm has to discover the best way to bill clients for its services. The billable hour has been setting the standard for some time, but a number of issues stem from the use of this methodology:

  • Charging clients by the hour often leads to highly inflated prices. A client will be charged, whether the entire block of time is used or not.
  • The billable hour will often lead to client animosity. The client will get charged whether they get a positive or a negative outcome out of the interaction. In addition, the billable hour endangers the positive relationships that is so essential for building trust and forming a partnership between a lawyer and a client.
  • A client will find it difficult to come up with a preliminary and accurate estimate about what they’re going to be charged. Not knowing how much legal services will cost can contribute to a lot of anxiety and uncertainty.
  • Billable hours can also result in a lot of inefficiency inside the law firm itself. Prolonging litigation and inefficient practices can often be prioritized for the purpose of charging clients more. As a result, the overall reputation of the law firm will suffer.

What is the Alternative?

According to the Report on the State of the Legal Market, power dynamics are shifting. Clients today have higher standards and more demands. They insist on getting value for the money spent on legal services. As a result, billable hours don’t really make a lot of sense in a dynamic that is slanted towards the client (and rightfully so!).

Another factor is also pushing legal companies to offer both quality and cost-efficiency. The competition is higher than ever before. According to the American Bar Association, the total national lawyer population has gone up from 574,910 practitioners in 1980 to 1,022,462 lawyers in 2000 and 1,335,963 attorneys in 2017. Most of these professionals (about 74 percent) end up in a private practice. If a client in need of legal assistance is dissatisfied with one service, they will easily find a quality alternative that is much more cost-efficient.

The switch away from billable hours is an obvious one but which billing method can deliver better, more sustainable results?

Flat fees have more or less risen to popularity in the legal world. Whether an attorney needs five or 10 hours of work to complete a task for a client, the fee will remain the same. This model results in predictability and it makes it easier for clients to plan the process in advance.

Depending on the field of practice, outcome-based payments could also make sense. An attorney will get paid when they help clients get a positive result. Needless to say, this model provides additional incentives for legal professionals to offer their clients the most adequate and tailored assistance every single time.