Will Corporate Counsel Push Law Firms to Drop Hourly Billing?
Corporate legal departments dissatisfied with soaring legal costs are pushing for flat-fee and other alternative billing.
Last month the Association of Corporate Counsel launched its “Value Challenge,” an initiative to spur alternative billing by companies’ outside law firms, the Washington Post reports. The suggested options include fixed fees, volume discounts and lower hourly rates in exchange for performance bonuses.
Association general counsel Susan Hackett said planning for the project began before the economic downturn. At the time, planners wondered how they could get law firms working for corporations to stop charging by the hour.
“Then the economic crisis happened,” she told the Post. “There’s going to be a heck of a lot of directives for folks at the firms to lower their costs.”
The Shepherd Law Group in Boston switched from hourly billing in 2006 to fixed and negotiated fees. Jay Shepherd, the firm’s chief executive, told the newspaper the firm’s revenue doubled the next year.
“Before the financial crisis happened, I thought in 10 years the billable hour would be on the way out. I now think that will be sped up,” he said.
Howrey has also negotiated fixed fees for some clients.
