A number of companies (such as Burger King and AT&T) are scrutinizing the billable hour due the pressure to reduce legal costs, especially in light of the down economy. Accordingly, they are looking at alternative billing methods they, including fee caps, blended rates, discounts, fixed fees, monthly retainers, success fees, and contingency fees.
Further, the article reports:
“In recent years, groups such as the American Bar Association, the Association of Corporate Counsel, various corporate executives and even U.S. Supreme Court justices have called for the demise of the billable hour, saying it breeds inefficiency and is driving up legal costs.”
I can’t personally say I know all that to be true, but I do believe the billable hour is doomed as the favored method of billing, as I have addressed in a number of earlier posts (click Continue Reading below, if you are interested in reading five of them), because it is like cost-plus government work (the more time you put in, the more you make), and billing by the hour has very little to do with the value clients’ receive for the legal services provided.
But unbelievably too many large firms still resist alternatives to the billable hour, which is why the door is wide open for smaller, more flexible law firms (a number of which are mentioned in the article) to barge into the gap.
So, if your firm is willing to share more of the risk through alternative pricing schemes that reward efficiency and success, you have a real opportunity to take work away from larger law firms in the current economy.