The legal community has been talking about the imminent death of the billable hour for decades. But value billing has finally gotten the boost it has always needed: an economy that is seriously in trouble. I’m seeing more and more articles suggesting that corporate counsel are using the downturn to extract billing concessions from outside counsel.
One commentator suggests that corporations and their law firms have some questions they should be asking themselves and each other:
Question for the lawyers: Is your firm ready to make this change? (Stated a slightly different way: By matter type do you really know what it costs to handle the various types of matters your firm handles?)
Question for the clients: Do you understand the ways you can get more value for your legal spend?
Question for both: Have you talked to each other about this?
He goes on to suggest paying a visit to the Association of Corporate Counsel’s Value Challenge website and states:
The ACC has put together a truly amazing online resource to help clients and their lawyers understand what clients really need, want and are willing to pay for. ..The premise for this resource is that many traditional law firm business models and cost management strategies (read reward more billable hours) are not aligned with what corporate clients really want and need: value-driven, high-quality legal services that deliver solution for a reasonable cost …
Creating fixed fee arrangements is one solution to the unpredictability of hourly billing and it may be that other solutions flow from this solution (i.e. once firms lose the incentive to bill more hours, they will look for ways to improve their efficiency). But even without adopting fixed fee arrangements, smart firms will examine how they are getting work done and will outsource more mundane tasks to non-attorneys, contract attorneys and even LPO providers like IPEngine.