Whether a firm utilises fixed pricing or time-based billing, problems arise when profit is prioritised over the health and wellbeing of lawyers, argues one NewLaw practitioner.
As of March last year there were nearly three in 10 firms using fixed pricing models. Global firm Dentons has just unveiled a fixed pricing tool for Australian businesses. There are, undoubtedly, more and more practices that favour this approach, and for many in the profession, the recent FWC requirements are but another in a list of reasons to move away from time-based billing.
According to NewLaw practitioners, there are myriad reasons to shift to fixed pricing. However, there remain many practitioners who still opt for time-based billing as they have clients who do not want movement away from the billable hour, as such a model gives them more control.
Speaking recently to Lawyers Weekly, Peer Legal principal Peter Moran said that for firms who use time “as the metric of their value”, the meeting of client needs and addressing the wellness needs of staff are not counterpoints.
Where a counterpoint exists, he submitted, is where staff wellbeing is sidelined for profit – which can arise whether a firm utilises fixed pricing or time-based billing.
“Excessive demands of clients can always be met without excessive workloads by hiring more staff and the law contractor firms have now made that easier to do than ever before. But, hiring more staff then impacts on profit and that is the balance that is needing to be struck,” he mused.
“The overtime issue [as highlighted by FWC] is useful in that it suggests that where firms are accepting jobs from clients that have excessive workloads but then attempt to meet that workload without taking on extra capacity, perhaps it is only reasonable that some of the financial benefit that the firm achieves through not paying for extra capacity should be passed on to the lawyers satisfying the workload.”
Ultimately, Mr Moran said employees will have to speak out about what they see as being reasonable.
“If people are prepared to work long hours without complaint and generate better profit, then most partners will take it. However, I appreciate how difficult it might be as a junior lawyer in a big firm wanting to make constant good impressions and say on the ‘partnership path’ to raise such issues, particularly if it is not part of the existing culture of the firm,” he said.
Perhaps one of the fallacies that underpins the problem – “and which might be an easier fight for younger lawyers to have”, he reflected – is that the issue is probably not an even one across the entirety of most firms.
“This may be because some young lawyers simply set down what they consider as reasonable in terms of hours or the partners they work for themselves set reasonable workload boundaries of their team, meaning the hours they generally work are not excessive,” he said.
“This can occur without those lawyers’ career prospects or remuneration necessarily being impacted. However, elsewhere in the firm, a completely different standard might be being applied and the lawyers in that part of the firm have completely different expectations placed on them, despite their remuneration and career prospects being no different to their colleagues.
“Perhaps a focus on firms should be ensuring a consistent approach across teams and that, when there is disparity, that is transparent and agreed firmwide and reflected in higher remuneration etc.”
Finally, he posited that many clients will likely take as much as law firms can give them.
“If the unreasonable demands of clients are always satisfied without consequence to the client, then that will become their norm and ongoing expectation of service levels. However, if law firms place a value on their services by, for example, charging urgency premiums for extraordinary turn-around times, then clients will themselves be required to determine when there is genuine value to them in paying for that urgent turnaround and when it is not,” he argued.
“If they are asked to pay for it, then clients may themselves become more educated as to when their demands are reasonable and when they are not and they should perhaps adjust their expectations of their lawyers accordingly.”