Firms may have to embrace changes in billing methods to succeed, new report says
This may be the last year that law firms can expect billing rate increases to drive financial stability, according to a new survey. (Image from Shutterstock)
This may be the last year that law firms can expect billing rate increases to drive financial stability, according to a new survey of more than 800 senior finance and legal professionals in large firms across North America, the United Kingdom and Ireland.
Technology company BigHand’s 2026 finance report suggests that firms can no longer rely on traditional measures of profitability, as clients are demanding more efficiency and predictability amid the increased adoption of artificial intelligence across the legal profession, according to Law.com.
Eric Wangler, BigHand’s global legal market president, told Law.com that 47% of firms also reported increased client demand for alternative fee arrangements last year. He predicts that about the same percentage or higher will likely make the request this year.
“[What] remains to be seen is, … although they’re being requested more often, are [alternative fee arrangements] actually being deployed more often,” Wangler said. “As firms become more efficient, start using AI more effectively, the pressure on them to pass those efficiency savings on to their clients will definitely be there.”
According to Law.com, Wangler also expects clients to increasingly demand outcome-based pricing, rather than hourly billing, and firms that agree to these new arrangements could outperform their competitors.
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