find the latest legal job
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
Legal Inhouse / Lawyer / Company Secretary
Category: Other | Location: Brisbane QLD 4000
· Fantastic Company · Potential to be Part Time / Flexible Work Pattern
View details
Part Time Risk & Compliance Officer
Category: Other | Location: Brisbane QLD 4000
· Brisbane City · Flexible Part Time Hours
View details
Infrastructure Lawyer/SA
Category: Construction Law | Location: Sydney CBD, Inner West & Eastern Suburbs Sydney NSW
· Global elite law firm · Dedicated Infrastructure team
View details
Big Four to beat law in dumping the billable hour

Big Four to beat law in dumping the billable hour

Steve Major

Pricing experts have predicted that accounting firms will scrap the billable hour before law firms, but neither sector is willing to change.

Steve Major (pictured), founder of consultancy Pricing Power, told Lawyers Weekly that accounting firms are moving away from the billable hour to a greater degree than law firms. However, client pressure rather than a genuine desire to reform pricing practices is driving the trend.

“The accounting firms are more receptive [to different pricing models], but that doesn’t mean they’re not struggling with it and resisting it,” he said.

“There are pockets of firms in both industries that have been adopting true value pricing and are ahead of the curve, but by and large the bigger firms are being pushed into it as opposed to identifying how to get out in front of the marketplace.”

Mr Major predicts the consulting arms of the Big Four will be the first movers, with other segments of their business following suit soon after.

Legal consultant John Chisholm agreed that consultancy practices would pioneer alternative pricing within their firm, with many already offering clients a project or success fee rather than time billing.

Even so, many of the fixed fees currently being offered by the Big Four, particularly in the traditional accounting areas, are still based around time, he added.

Both Mr Chisholm and Mr Major said smaller accounting firms, especially those with a multi-disciplinary practice, are more receptive to adopting alternative pricing across all segments of the business.

“Accountants on the whole have invested more heavily in outsourcing than have law firms and they have found they can provide more efficient, quicker and lower cost services and products to their clients, while at the same time retaining healthy profit margins by using fixed fees with their clients,” said Mr Chisholm.


A similar rationale

Firms in both sectors have cited similar reasons for retaining the billable hour.

They argue that time billing is equitable, that the structure of accounting and law firms lends itself to the billable hour approach, and that fixed fees shift business risk from the client to the firm.

Lawyers, specifically, argue that the profession is heavily regulated, making pricing reform difficult.

While Mr Major acknowledged that regulation is a legitimate concern for law firms, he added that it is far from an insurmountable challenge.

The real issue, he said, is the cost of fundamentally changing the way law firms do business.

“The big law firms have so much of their internal systems and processes focused on the billable hour; it will take an incredible pressure for them to change a whole method of being,” he said.

Mr Chisholm commented that lawyers are finding problems or perceived risks in alternative pricing structures that “just aren’t there”.

“Lawyers are good at finding problems, that is our stock in trade,” he said.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Big Four to beat law in dumping the billable hour
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Anti-radicalisation programs playing ‘second fiddle’ to terrorism laws
Several academics have questioned the balance between Australia’s counterterrorism legislation and...
 William Ah Ket
‘Bamboo ceiling’ thought piece wins inaugural law prize
A paper that explores the idea of affirmative action to achieve greater diversity among members of A...
Nov 22 2017
Reduced investment protections will make robust commercial arbitration mechanisms all the more critical for investors
Promoted by Maxwell Chambers. This article discusses the current trend away from investor protect...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...