It’s been months, and in some cases years, in discussion, but the end of time-based billing may finally come to the legal profession in 2010, experts predict.
Telstra general counsel, Will Irving, has told The New Lawyer that the experience of 2009 may well force the profession’s hand when it comes to developing alternative billing arrangements.
The global financial crisis will be blamed for the change, a label many clients and law firms are likely to see as a positive.
Irving told The New Lawyer that like every area of the economy, budgets for in-house legal teams remain tight. Efficiency, he said, is now all important and getting the best value from external law firms will remain a key priority for general counsel in 2010.
“In our case, making greater use of non-hourly billing has driven considerable efficiencies and aligned internal and external lawyers,” Irving said.
The past year really secured alternative billing as an issue of key importance for the Australian legal profession, said John Chisholm, of law firm consultancy Chisholm Consulting.
“There has been quite a significant change and movement in 2009 on that value issue,” he said.
At the discussion level alternative billing has taken centre stage, said Chisholm, “and most law firms have hoped it would go away. I don’t think it has”.
In 2010 we will see corporates become more confident in using alternative fee arrangements, according to Chisholm. “It’s new for some, and for those who got used to the billable hour syndrome it’s all new.”
But he said corporates are now learning how to come to agreements with their law panels on fixed fee and other arrangements.
While some law firms have been making a name for themselves by abandoning hourly billing and instead working through different billing arrangements with clients, such as on a retainer or fixed-fee basis, until the majority of their clients demand it, many firms will not budge on it.
In a bid to reduce costs, Wal-Mart’s associate general counsel, Miguel Rivera, froze all hourly rates for 2008 by issuing a decree to all his law firms in late 2007.
In 2008, the Australian Corporate Lawyers Association conducted a survey of legal departments in Australia and New Zealand, revealing that the number one way (at 62 per cent) a law firm could improve its relationship with a client is to “be more concerned with costs”. And the recent global economic crisis has just increased the squeeze.
Meanwhile, at least one Australian law firm is charging more than $1,000 an hour for some of its partners’ advice.
To read Will Irving and John Chisholm’s views on the impact of increased regulation on general counsel, click here