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Time-billing eroding, but alternatives gathering momentum

Time-billing eroding, but alternatives gathering momentum

It's too soon to announce the death of the billable hour, but in-house lawyers are harnessing their increasing powers spun off from the GFC to negotiate, and sustain, alternative fee…

It's too soon to announce the death of the billable hour, but in-house lawyers are harnessing their increasing powers spun off from the GFC to negotiate, and sustain, alternative fee arrangements, according to a report released today by consulting group IKD.

The report, based on round table discussions with both in-house counsel and law firm participants, was undertaken by Dr Ben Tabalujan, director of IKD, and Andrew Godwin, a senior lecturer at the University of Melbourne's law school.

They said the research was carried out in response to criticism of time-billing that commonly occurs in the press, as well as the general slowdown in work at law firms which is believed to have given in-house lawyers more control in the billing negotiation process.

Godwin told Lawyers Weekly today that the study wanted to find out if the commonly aired predictions that hourly billing methods are fast disappearing are correct. "Our conclusion on that would be no - time-billing is very much here to stay," he said. "But [billing methods] are likely to be modified to take account of the fact that there is what we would describe as an irreversible trend towards alternative billing methods (ABMs)."

Meanwhile, Godwin said the research also indicated that while the GFC has highlighted the importance of debate over ABMs, such debate has been under way for some years now. "That's [the debate] now coincided with increased pressures on in-house legal departments to manage their legal spend more effectively. I think there's been particular concerns in the area of litigation and that is reflected in the comments in the recent Access to Justice report released by the Attorney-General."

He added that in-house lawyers are in a much stronger position now to negotiate fees - a position the in-house participants on the round tables said they are looking to maintain into the future.

"They are trying to imbed the right practices, if you like, and encourage law firms to be more flexible in considering alterative billing methods," said Godwin.

But Godwin did question whether time-billing had been given a bad rap simply because of certain areas of law which may have taken advantage of it: "In my view, time-billing has been somewhat of a scapegoat, and has been blamed for the increase in legal costs when, in fact, this is a trend that has emerged as a result of a much greater involvement in litigation [by organiations] and an increase in costs generally."

The report will be released at the Australian Corporate Lawyers Association's National Conference in Melbourne.

- Angela Priestley

For more analysis of this report, see next week's edition of Lawyers Weekly.

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