Billing and budget models

Developing a sustainable universal representation program that centers the provision of zealous, independent, and person-centered representation depends in large part on how the program is paid for. Billing and payment systems should provide for sufficient resources, incentivize efficiency, and promote the most fitting roles for all stakeholders. Although Vera advocates using the flat-rate budget model for universal representation programs whenever feasible, it is good for program administrators to be familiar with other billing and payment systems used that may be more appropriate given the circumstances of their program. This allows providers and government funders to engage in meaningful conversations about representation costs and appreciate the advantages and disadvantages of each budget model, while also recognizing that local governments may have limits as to what billing and payment models are available. Governments and providers may also consider using a hybrid model that uses multiple payment systems, particularly for programs involving multiple providers. For example, a program might compensate some providers using flat-rate budgets and others using hourly billing; this helps ensure that sufficient capacity is reserved in advance via flat-rate providers while maintaining flexibility to handle higher-than-expected case volume or conflict cases via hourly billing. Such a hybrid system also mitigates the risk to the government of overpayment in a fully flat-rate system.

The flat-rate budget model

With a flat-rate budget, providers represent a defined caseload at a predetermined rate, paid in regular installments over the course of the funding period. The caseload consists of cases that are open at the beginning of the year (“carryover” cases), as well as projected new cases taken on over the course of the year. The flat rate should cover most aspects of the program: staff time, certain non-personnel expenses such as office rent, phones, and routine travel, and other costs associated with administering the program. Flat-rate budgets should typically not include variable case-specific costs such as expert witnesses or filing fees, which should be funded separately. To hedge against the unpredictability of case assignment volume over the funding period, flat-rate budget models should also include a mechanism for increasing or decreasing funding if the volume of new cases is substantially above or below the initial projection. Flat-rate budgets may be easier to implement for larger, more mature programs, given that administrators can better gauge case volume and reasonable caseloads based on past experience and data.

› Advantages: The main advantage of flat-rate budgeting for all parties is predictability. The government knows in advance the total cost and number of cases the provider can take, while the provider knows what its income will be and can actively hire and train staff, a critical advantage for building infrastructure in a program. Flat-rate budgeting can also reduce the government’s intrusion into casework and the administrative burden on all parties, given that providers do not need to submit detailed hourly invoices. The lower administrative burden also translates into lower overall costs for providers and government administrators.

› Disadvantages: Under a flat-rate budget, providers assume the risk of unusually complex or time-intensive cases to a greater degree than with hourly billing. In addition, flat-rate budgets may not be a good fit if program volume is small or unpredictable. Under this model, the government risks overpayment if case volume is below expectations and risks having to add more funding (or leave some cases unrepresented) if volume exceeds expectations and additional funding or capacity is unavailable. Flat-rate budgeting can be particularly difficult at the beginning of a representation program if there is no case time and cost data on which to base budgets. To address some of the uncertainty in volume and costs, programs can do several things. First, providers and governments can use available data—including the number of unrepresented people in removal proceedings and cost data from similarly situated jurisdictions—to develop informed estimates. Second, providers and government funders should communicate and be flexible to the extent possible, so that both can accommodate higher or lower case volume. For example, if volume is lower than expected, the program can broaden its eligibility and residency criteria or expand the scope of funded services (for example, by including non-detained representation, affirmative representation, and community education). Such flexibility helps ensure that all parties can continue to benefit from the knowledge, experience, and infrastructure that has been created, and may decrease or eliminate the need for legal service providers to reduce staff during what may be a temporary drop in case volume.

The hourly billing model

Under an hourly billing system, providers negotiate hourly rates for staff and bill the funder for time spent working on cases. Hourly rates can be set for each employee or for categories of employees such as attorneys or paralegals.

› Advantages: Hourly billing allows the government funder and provider to understand and develop data regarding the time, cost, and volume of cases—data that may be particularly useful at the beginning of a program. Because providers are paid for exactly the amount of time that staff spend working on their cases, they are fully compensated for all work performed, eliminating the risk of underpayment if cases turn out to be more complex or time-consuming than anticipated. At the same time, the government pays only for work performed, limiting the risk of overpayment if cases are simpler or resolved more quickly than anticipated. Hourly billing is also highly flexible, because it does not require the provider to accept a specific number of cases; rather, the provider can accept as many cases as it has capacity for and bill for the amount of time spent working on them.

› Disadvantages: As representation programs grow, hourly billing may have some drawbacks. It is administratively burdensome for providers to record and review individual billing charges, particularly for organizations not accustomed to charging or tracking their work on an hourly basis. The need for governments or third-party administrators to review detailed hourly billing invoices also involves a degree of intrusion into providers’ casework, and programs should ensure that payment is not contingent on approval of case-level decisions by the government or administrator, a stipulation that would limit the independence of counsel. Hourly billing also provides little incentive for the provider to control costs and complicates proactive budgeting and staffing because costs can vary substantially depending on case volume, the complexity of individual cases, and other factors. If future revenue is uncertain, providers may be reluctant to hire new staff and add capacity to their programs. This model may also undermine and underfund the necessary 60 Vera Institute of Justice infrastructure of support work critical to a successful program but not attributable to a specific case, including training and professional development and other direct costs, including rent and technology equipment. Programs using hourly billing should permit providers to bill at their hourly rates for such activities or incorporate those costs into their hourly rates.

The fixed-cost-per-case budgeting model

Under this model, the government pays the provider a fixed amount of money for each case assigned. This cost can be structured to include all costs of representation or only certain costs. (For example, it could cover casework costs but exclude expert witness costs, which may not be incurred in all cases.) If this model is implemented, the fixed cost should have some flexibility to account for particularly complex or time-intensive cases—for example, a supplementary fixed cost could be paid if the case goes through multiple rounds of removal proceedings—and should be updated regularly to incorporate recent case cost data and projected future cost drivers. The cost can be paid in a lump sum when the case is initially accepted or can be paid in installments at certain milestones over the life of the case (such as half upon case acceptance and half upon case completion). For the reasons described below, the fixed-cost-per-case model is not recommended for use in immigration representation programs.

› Advantages: Like the flat-rate budget model, the fixed-cost-per-case model provides some cost certainty for the government and income certainty for the provider, particularly when case volume can be reasonably predicted. It also allows for more flexibility than the flat-rate model, as the funder and the LSP do not have to agree to a set number of cases. The fixed-cost model also keeps the funder from intruding into the specifics of a case, as the provider is paid the same amount regardless of the outcome.

› Disadvantages: The fixed-cost-per-case model has several significant disadvantages when compared to the hourly and flat-rate models. Just as with the hourly billing model, this model undermines and underfunds the necessary infrastructure of support work critical to a successful program but not attributable to a specific case. The most difficult aspect of the fixed-cost model is determining an adequate case cost, particularly at the beginning of a program when data about case costs may not yet exist. Even when case-cost data is available, it is necessarily backward-looking, so the fixed cost may not reflect the current cost of representation or incorporate projected future representation costs. This is especially important given the lengthy timelines of immigration proceedings, which often take years to resolve. This model also provides for less predictability about staffing and case volume than flat-rate budgeting does, although it can be translated to a flat-rate budget if the case volume can be anticipated in advance. If the fixed cost is paid out in installments over the life of the case, providers are forced to carry the costs of representation until those milestones occur, and that could be months or even years after the case begins. Under this model, the provider also bears the full risk of especially complex or time-consuming cases, unless the fixed cost can be supplemented or waived. The government also bears the risk of overpayment if cases turn out to be simpler or less expensive than anticipated.

The unit pricing model

Like the fixed-cost model, unit pricing involves setting a fixed cost for discrete “units” or activities involved in representation. For example, providers may set separate fees for pursuing bond, applying for relief, or appeals. As with the fixed-cost-per-case model, the unit pricing model is not recommended.

› Advantages: Under unit pricing, the provider is paid only for the activities performed in each case. Like hourly billing, this reduces the risk of overpayment by the funder while ensuring that the provider receives payment for all work performed.

› Disadvantages: As with hourly billing, a significant disadvantage of unit pricing is that the major activities that take place in cases can be unpredictable, and payment occurs only after some work on a given case has been performed. This makes it difficult for a government funder to anticipate costs, because costs will depend on individual case-level decisions. It can also be challenging for providers to know in advance what staff their budget can support. The disadvantages of this model can be mitigated by providing an initial up-front payment upon case acceptance to pay for case development and investigation, although unit pricing models should make clear the point at which payment is triggered (for example, whether payment is issued once a provider intends to begin work on a “unit” or stage of the case, upon its completion, or somewhere in between). As with the fixed-cost model, it can be difficult to determine a fair and adequate cost for each phase. Unit pricing may also incentivize providers to pursue strategies that result in additional payment but may not be the most efficient or effective use of time and resources, potentially to the detriment of the client.