Recently in Alternatives to hourly billing Category

This post was written by Stephen Seckler: "In the past year, there has been a lot written about alternative fee agreements (including my own article in Lawyers Weekly).  More predictability is clearly what corporate counsel want and AFA's are one path to reach this objective.

But once the clock stops running, how do law firms ensure that their bottom line is not negatively impacted?

The answer, of course, is that law firms must learn to do what virtually every other business does every day:  law firms must find ways to control expenses.

There are a variety of ways that private law firms can accomplish this.  At this week's ILTA conference in Las Vegas, for example, KM guru David Hobbie is speaking about the http://www.seckler.com/afas-are-good-for-law-firm-marketing-but-what-about-profits/ in bringing down legal costs.

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Source: Counsel to Counsel, 23 August 2010, reproduced with permission of the author.

This post was written by Tom Kane: "If you still don't like the idea of offering clients alternative fees or value pricing options, then how about just letting the client decide how much they want to pay for legal services? WHAT!!!, you say. A pretty far fetched (or ludicrous) idea, right?

Not so fast. CMS Cameron McKenna, a UK firm with more than 1000-lawyers, is offering that as an option to "3500 existing and prospective clients" as part of its alternative fee program, according to an article on The Lawyer by Gavriel Hollander. They are also offering an oil company fees based on the price of oil, and another a "no questions asked" fixed fee for a "one-stop deal."

To be eligible clients must agree to the majority of work being managed by an associate, and agree "to give Camerons more than a third of all legal work..."

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Source: Legal Marketing Blog.com, 20 August 2010, reproduced with permission of the author

This post was written by Chuck Newton: "I have read a lot recently about fairness to clients and about the marketing technique of allowing clients to set the price of representation. I contend whether you work on an hourly or fix fee or some other arrangement, it is a silly concept to think that the client is not setting the price for services in the first place.

It is kind of like someone asking if the job to which they are applying is a commission job. Of course it is. All jobs are commission jobs in the sense that if you do not bring in business or make money for the company or law firm you will be out of there.

The same is true for pricing of legal services. You set what you want, but if it is too high you will not have any business. And, the little business you might find will likely end up in the grievance process. Who wants that.

So, maybe you think you are in control of pricing, but are you really?..."

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Source: Chuck Newton Rides the Third Wave, 18 August 2010, reproduced with permission of the author.

From the site: "FEATURES: PRACTICE-BASED ALTERNATIVE FEE ARRANGEMENTS

The Billable Hour Zombie: Why You Need to Act Now to Avoid an Attack on Your Business

By Jessika M. Ferm

Various factors seriously threaten the traditional hourly billing system--but some easy-to-implement strategies will help you realign.

"This Isn't Your Father's Law Firm"--But Maybe It Should Be

By Victor J. Medina

Are you ready for a practical alternative to the "legal services as commodities" trend? Here's an approach that builds a longtime client family.

Make Time Work For You: Handling Cases on a Fixed-Fee Basis

By J. Benjamin Stevens

There are multiple reasons why handling cases on a fixed-fee basis is better for both our clients and ourselves.

Fixed-Fee Engagements in Litigation Cases: Why and How

By Michael Sherman

Making the argument for why fixed fees are better than hourly billing, along with practical tips for how to make the switch.

Client-Directed Billing: Shifts in Who Defines the Value of Legal Services

By Jim Calloway and Mark A. Robertson

More and more, clients are directing how the value of the legal services they use is determined and many of them are looking at alternatives to hourly billing.

From Practice to Business: Flat-Fee Relationship Engagements for Transactional Lawyers

By Kevin E. Houchin

Getting beyond the hourly billing trap requires admitting there's a better way--and then acting to implement it."

Source: Law Practice Today, July 2010.

This post was written by Jim Hassett: "In my opinion, any lawyer who wants to understand the nitty gritty details of how non-hourly fees really work, from pricing to project management, should buy Pat Lamb's new book Alternative Fee Arrangements: Value Fees and the Changing Legal Market.

To put this into context, people who work with me often remark that I am cost-conscious.  (All right, they say I'm cheap.)  And while I often recommend books (for example, see my Amazon list of the top marketing and sales books for lawyers), I am quite confident that this is the first time I have recommended an 81-page book that costs 295£ (about $445 US).

The reason I am suggesting that you consider spending freely here is that if you bid on and work on alternative fees matters, the information in this volume can help you save many times its price..."

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Source: Legal Business Development, 14 July 2010, reproduced with permission of the author

This post was written by Rob Millard: "One of the latest offerings from Managing Partner comes as a complete breath of fresh air.  Alternative Fee Arrangements: Values Fees and the Changing Legal Market is written by Pat Lamb, who I count as a good friend, but who more importantly is managing partner of Valorem Law Group in Chicago. Valorem is a law firm that has been successfully practicing the art of not billing by the hour for some years now. Many readers of this blog will no doubt also know Pat's excellent blog In Search Of Perfect Client Service..."

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Source: Adventure of Strategy, 21 June 2010. Copyright 2010, Rob Millard, reproduced with permission of the author.

This post was written by Allison Shields: "Earlier this month, Larry Bodine did a piece on the Law Marketing Portal about alternative fees entitled, "Study Finds Weak Client Demand for Alternative Fees," in which he talked about the Center for Competitive Management (C4CM)'s  2010 Alternative Billing Benchmarking Study.*

...Reportedly, one of the reasons clients have not embraced alternative fees is that they are not well understood by either clients or lawyers. The C4CM report listed a number of obstacles to implementing alternative fees from the perspective of law firms and law departments, including lack of historical data to evaluate whether alternative fees would be profitable, lack of 'buy in' from key firm personnel, lack of skills to implement alternative fees and the ease of continuing with the existing system, which is configured for hourly billing and compensation based upon hours.

From the law department perspective, obstacles included a lack of incentives for in-house personnel to use alternative systems, difficulty in comparing costs among different firms if others are billing hourly, concern about whether firms billing under alternative arrangements would be as accountable as those billing hourly, and again, the difficulty of altering existing systems and measurements which were based on an hourly system.

What does this mean for lawyers and law firms? Should you abandon the idea of alternative billing? Not necessarily - especially for smaller firms and those working with clients who don't already have well-established measuring systems based upon hours or who aren't using multiple firms..."

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Source: Legal Ease Blog, 16 June 2010, reproduced with permission of the author.

Podcast description from the site: "On a scale of 1-5 (5 being the highest) rank your level of agreement with the statement: I know the most profitable and efficient way to run my law firm. Description: Rocket Matter is proud to host a free webinar on Law Firm 2.0: Understanding Alternative Fees and the Future of Law. Someone recently said, "If law firms didn't know they were businesses in 2009, they certainly know it now." The changing nature of the business of law can be daunting, even frightening for most small firms. But with the right knowledge and tools, lawyers in the know have an amazing opportunity to take their firms to new heights. Join Jason Mendelson and Larry Port as they draw on business techniques to discuss Alternative Fee Engagements, Pricing, Hiring Techniques, and other forward-thinking ideas to craft a 2.0 law firm..."

Source: RocketMatters Podcasts Free on iTunes. Release date 23 April 2010.

This post was written by Tom Kane: "During Jackson Lewis' annual corporate counsel conference, as reported in The National Law Journal and on Law.com's Small Firm Business, alternative fees are "putting down deep roots."

This got my attention, because although there has been much written about the subject including on this blog, it hasn't seemed that alternative fees were catching on all that quickly. Percentages of law firm fees, other than the billable hour, have ranged from as low as 2% to as much as 20% over the next ten years.

Accordingly, the panel on "The Death of the Billable Hour?" at the Jackson Lewis conference struck me as particularly interesting based on the report that "many companies and law firms now report that as much as 40 percent of their work is billed on alternate billing arrangement that include flat fees, phased billing and contingencies." That comment was attributed to Michael Roster, chair of the Association of Corporate Counsel's Value Challenge. If anyone should be getting accurate percentages, it seems to me that would be the ACC.

So, if that percentage is attributable NOW to value billing, what can we really expect in ten years? And, if it is only going to increase, there are two points I'd like to make..."

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Source: Legal Marketing Blog.com, 18 May 2010, reproduced with permission of the author

This post was written by Randall Ryder: "I may not work at a big firm, but the concept of "hitting your billable hours" is well-known to law students, lawyers, and fans of John Grisham novels. Smaller firms and solo practitioners might not have a threshold number, but they still know how many hours they need to bill to stay in the black.

Admittedly, hourly-billing has advantages, which is part of the reason it is so widely used. But it also has a number of downsides..."

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Source: Lawyerist.com, 3 May 2010. © 2007-2010 Lawyerist Media, LLC. Reproduced with permission of the site editor, Sam Glover.