Fixed fees give AdventBalance the inside track

The following article by Chris Meritt was published in The Australian on 19/10/12. (click here to access the original)

Fixed fees give AdventBalance the inside track

by: Chris Merritt

ONE organisation that was not surprised by the corporate antipathy towards time- charging is the newly merged fixed-fee firm AdventBalance - which has just expanded its first-quarter revenue by 33 per cent.

The merger, which took effect on July 1, brought together two firms that had already grown rapidly by providing "insourced" lawyers on fixed fees to corporate clients.

Those firms were Sydney's Advent Lawyers and Perth's Balance Legal.

The deal created a national organisation with more than 100 lawyers in Sydney, Melbourne, Perth, Brisbane, Singapore and Hong Kong.

AdventBalance now has lawyers working with clients who are even further afield - in Paris and Geneva.

Chief executive Ken Jagger said the unmet demand for certainty about legal fees was one of the main reasons behind his decision to launch Balance Legal in 2008.

"We are just the start of it. The developments we have seen with alternative legal models in the UK and the US will be here very soon," he said. "A lot of boutiques will fall out of big law firms as they internationalise.It's a great opportunity for people who can provide certainty about cost."

Mr Jagger said he was heartened that the survey conducted by the Australian Corporate Lawyers Association and the Corporate Lawyers Association of New Zealand had identified little support for billable hours, "but I definitely am not surprised".

"I was getting this feedback from clients all the time -- that the current model was unsustainable."

When Balance Legal was launched, it consisted of Mr Jagger and two senior associates. In 2010, he told The Australian his firm had 23 lawyers and had more than doubled its revenue. It wason target to bring in between $4.5 million and $5m.

In May, just before the merger with Advent Lawyers, he said Balance had again experienced 100 per cent annual revenue growth.

Internationally, the fast-growing US firm Axiom Global is also riding the wave of alternatives to the billable hour.

Axiom, which was founded in 2000, has a client list that includes almost half of the Fortune 100 co mpanies.

As well as supplying its lawyers to work from clients' offices, it has established its own legal outsourcing centres.

In the US, similar business models are being used by Washington-based Clearspire and California- based Virt ual Law Part ners.

Clearspire offers fixed-fee project pricing while Virtual Law Partners offers flexible fee arrangements including fixed-fees, a monthly retainer, payment at closing and milestone billing.

Mr Jagger said he had some sympathy for large firms as some of their work would be difficult to offer on a fixed-fee basis.

"But it is not impossible. Merchant bankers have managed it over the years. There is a lot of legal work where it is absolutely possible to come up with a fixed fee," he said."I don't think the big firms are making enough of a distinction between the types of work where a fixed fee could be agreed."

The client list at AdventBalance in Western Australia includes international oil and gas producers, mining companies and construction companies.

On the east coast, the financial services industry features on the client list. In Asia, lawyers from AdventBalance are working for a mix of all categories of clients.

"We are not paddling around in the mid-tier sector," Mr Jagger said. "There is definitely a market for this in the same market that the large firms service."

Law firm consultant John Chisholm said he did not accept the survey's findings that 52 per cent of in-house legal departments disliked time-charging but said no alternatives had been provided.

"There are an increasing number of options," said Mr Chisholm, a former managing partner of Maddocks and a former chief executive of Middletons.

But he said many law firms had not been sufficiently assertive about offering alternative fee arrangements when pitching for work.

"This is a wonderful opportunity for the AdventBalances and all the others" offering fixed fees.

He said the firms that had embraced fixed fees included Perth's Bowen Buchbinder Vilensky, an incorporated practice that abandoned the billable hour in 2010.

Others included Victoria's Moores Legal, which abandoned timesheets on July 1; and Actuate IP, a firm of patent and trademark attorneys with offices in Sydney and Melbourne.

Mr Chisholm said law firms needed to be more proactive about adopting fixed fees or risk watching clients move to competitors:"If a client comes to you and asks you how much something is going to cost, and you cannot answer them, don't be surprised if they go somewhere else where they can."