Alternative billing increasingly popular

Alternative fee arrangements — often touted as the wave of the future for lawyers — apparently have become common, at least for large firms.

According to a national survey from legal consultancy Altman Weil Inc., almost all firms with 50 or more lawyers offer some form of alternative billing. For those with 50 to 99 lawyers, the figure is 90 percent. The percentage rises with the size of the firm, hitting 100 percent for firms comprised of 250 or more lawyers.

Altman Weil contacted managing partners and chairs nationwide in April and May at 787 firms with more than 50 lawyers, receiving responses from 218, or 28 percent.

Moving to alternative fee plans would take the focus off the number of hours an attorney works and put more attention on the value of the work, while providing clients more certainty as to their legal fees.

In a report released earlier this year, Altman Weil said creating a proper alternative fee scheme would require law firms to “re-engineer how they do the work, but if done right, the benefits can accrue to those firms.”

Reducing legal spending is the top priority of general counsel, according to a recent Association of Corporate Counsel study, and it showed in Altman Weil’s survey, where 58.7 percent of firms said they implemented alternative fees in reaction to such client requests.

Results were mixed regarding the financials of moving away from the billable hour to fixed rates for services, since most firms surveyed said they do not track the profitability of alternative fee arrangements.

Still, of the five 1,000-plus attorney firms surveyed, one said overall fixed rates were more profitable than projects billed at an hourly rate, three said the revenue was similar and one said those fixed-rate engagements were less profitable.

Across the ranks, nearly 80 percent of those surveyed said they believed non-hourly billing would be adopted as standard by most firms in the future. Nearly 6 percent said they believed it would be a temporary trend, while the rest said they were unsure.

One comment

  1. Darryl – just came across this article and thought you might find it interesting. It talks about how, in an effort to reduce legal costs, clients are asking the large law firms for fixed rate billing for particular work as opposed to hourly billing.

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