CLIENTS ARE almost entirely united in seeing an end to the billable hour, with a majority of lawyers willing to agree, an anonymous survey has revealed.
Conducted by Lawyers Weekly, the survey of those in attendance at the recent Australian Legal Practice Management Association (ALPMA) conference showed that 95 per cent of clients believe a majority of clients want a change from the billable hour system. This was complemented by 71 per cent of lawyers who admitted most clients desired a change too.
Just under half of those attending the conference were aged between 46 and 60. The bulk of the audience were managers at law firms (69 per cent), with lawyers (12 per cent), external service providers (9 per cent) and law firm internal support (8 per cent) making up the rest.
When asked about the billable hour as a system of calculating fees, only 3 per cent believed it is extremely effective, 40 per cent somewhat effective, 26 somewhat ineffective and 13 extremely ineffective. The remaining 18 per cent did not have an opinion either way.
Legal services commissioner of New South Wales, Steve Mark, said cost is still the biggest area of complaint.
“The tyranny of the billable hour is quite extraordinary,” he said.
“The problem is that the legal profession has adopted the billable hour from the accountants. The accountants used it as a costing measure. We have used it as a charging measure. It is a very good costing measure. And that may be a very good aspect of your charging, but it shouldn’t be automatic in my view.”
Change is already on the cards according to Marks, with alterations being made to the Legal Profession Act, disclosure requirements and a cost panel review report currently being considered by the Standing Committee of Attorneys-General (SCAG) and the NSW Government.
“Other things are being discussed such as fixed fee arrangements, and the issue of what we might call ‘flexible fixed fees’, where you might have negotiating points where the fixed fee is reviewed,” he said.
“And then there are issues of budgeting, which have been a recommendation of the cost panel review. That will be an interesting one because we have found practices, particularly through the process of incorporation, are becoming better managed.”
According to Marks, improved management alleviates budgeting problems and so “you are more likely to have systems that can help you achieve an appropriate budget for a matter”.
“If that is the case then that is better for everyone. It will get more certainty, more cash flow, the business model will be better, and the client will be happier,” he said.
Alternative billing remains an attractive alternative, according to the ALPMA survey. Of the entire audience, 71 per cent professed to using alternative billing methods, compared to 26 per cent who did not, and 3 per cent who were unsure.