Recently Bendigo & Adelaide Bank were one of only 12 organisations awarded the coveted US Association of Corporate Counsel Value Champions for 2015. As you might be aware some years ago the ACC set up the ACC Value Challenge and each year the ACC identifies and highlights individuals
"who have effectively utilized value practices to drive change within their departments by cutting spending, improving predictability and achieving better outcomes."
The full list of 2015 Champions are named here and notably Bendigo & Adelaide Group Legal was the only Australian winner which is a tribute to all the hard work, innovation, and trial and error, Head of Group Legal Maria Polczynski, Mark Miller, Nick Clark and the rest of the team have put in over the years.
It is really worth reading in full this article by Jennifer J.Salopek headed "Make It So:An Australian Bank Banishes Hourly Fees" on the Bank's journey especially only accepting value based fees from their panel law firms. There were of course a range of other initiatives the Bank team implemented but this excerpt from the article sums up their pricing and value expectations from law firms pretty well I think:
".....it is in the area of value-based pricing with outside law firms that Bendigo has been most progressive. Polczynski says, “The hourly rate is still alive and well (for now), and firms see anything but hourly rates as alternative—the exception rather than the rule.” She notes that while capped fees are more common and accepted, most options still are time-based.
After two years of engaging firms only on the basis of fixed, value-based pricing, but seeing variations and scope creep default back to hourly rates, Bendigo took a radical line in 2014 by writing hourly charges out of the terms of engagement for all institutional panel work. The bank’s institutional law firms agreed that, absent pre-agreed fixed prices, after-event discussions on pricing would start from the bank’s honest but subjective assessment of the value delivered, without reference to hours or rates. The resulting collaboration with panel firms has led to better alignment between firm and client objectives. Bendigo has become a prominent and influential champion for change in the Australian legal market: Polczynski goes out on the speaking circuit to promote the methodology with other legal industry participants, with the goal of encouraging uptake towards a tipping point in the pricing of legal services in Australia.
Fixed pricing has greatly enhanced budget predictability. Polczynski has instituted some innovative variations including pricing for “mini matters” and “mini retainers.” For litigation work, introducing a rolling retainer with quarterly setting of the prospective monthly fee against required deliverables resulted in costs that were reduced and smoothed, and rolling forecasts that were more accurate."
Maria and her team have been longtime advocates and supporters of value based fees and lets hope not only other in house legal teams follow the trail blazed by this Bank but that more and more law firms come to the realisation that doing away with billable hours will not only be welcomed by the vast majority of their clients but that those law firms who provide exceptional value and service to their clients can also reap substantial rewards.
The winning S.A and Victorian Bendigo & Adelaide Bank teams below.