In a torrent of LinkedIn comments last week, lawyers in the NewLaw space across Australia slammed the billable hour and argued clients prefer fixed fee pricing.
The comments came in response to a Lawyers Weekly interview with Gilbert + Tobin managing partner Danny Gilbert, who posited that clients of BigLaw firms prefer billable hours as a pricing model for the reason that it allows those clients to retain more control.
Voicing their views on LinkedIn, close to a dozen practitioners debated whether the billable hour is “dying or thriving” and reflected on their own experiences with pricing options.
View Legal director Matthew Burgess wrote that billable pricing is “damaging to team members and customers on every single test”, and only works in the context of BigLaw environments.
“In time (no pun intended), it will be viewed with as much ridicule as slavery,” he asserted.
“Until then the machine that is BigLaw will act analogously to the manner the tobacco companies and certain dominations [sic] of the Christian faith have allegedly conducted themselves when facing truths.”
Progressive Legal principal Ian Aldridge mused that litigious matters are “notoriously difficult to estimate, let alone flat fee” but added that “the overwhelming evidence is that clients prefer fixed fee in almost every circumstance”.
“[Clients] want certainty around cost. We do as well when we’re consumers of other’s legal services. We’re going to see fixed fee pricing more and more.
Retainers will rise as well. People will expect them, and just like the accounting profession (although what they do lends itself far better to a retainer model), if you don’t have fixed pricing or a retainer model, people will simply look elsewhere,” he wrote.
“Internally, I think the billable hour is still useful as a tool to work out what areas of the business are profitable and what work is fairly priced, but I think it’s probably only a matter of time now [before it is phased out].”
Hive Legal associate principal Melissa Lyon added: “#notimesheetshere [sic] and oh my goodness, we have happy clients and a happy team!”
Support Legal director Deborah Vella said that for her Northern Territory-based business, the billable hour “never saw daylight”.
“As a lawyer, I celebrated the day I realised I’d never track my time again, which evidently was about six weeks after I’d actually stopped using billable hours. It took that long for the anxiety of missing a six-minute unit to actually wear off and I’d never wish that feeling on anyone,” she said.
“I’m sure there will be a segment of the legal industry that will always hold on to the billable hour. If they’ve never used any other model and have no incentive to, I wouldn’t blame them. They’re entitled to do what they feel is best for their firm. The billable hour just doesn’t fit with our values.”
The director of professional services pricing consultancy firm Innovim Group John Chisholm said there are Biglaw clients who do still want the billable hour, but the overwhelming majority of those clients are lawyers themselves in the in-house space.
“Why do they want/accept the billable hour? Because they came from the private profession and that is what they are used to and trained on and comfortable with. Lawyers buying and selling from each other is, sadly, not always a recipe for innovation or change though,” he mused.
What those clients say they want and what they need, however, are two different things, he argued.
“There are of course a growing number of in-house lawyer clients who just refuse to any longer to accept the billable hour and all its deleterious effects and a credit to those lawyers. The overwhelming majority of clients of lawyers who are not lawyers but business people and economic buyers, if given a choice, would, I believe, prefer up front prices and fixed fees for an agreed scope of work,” he said.
“Thank goodness those clients have a growing number of options these days and don’t have to accept the 20th-century retrospective billing model.”