Sherlock Holmes engaged to help law firms find alternative to billable hours


A recent website poll conducted by Lawyers Weekly asked, "is it time to phase out billable hours?". 47% of respondents apparently believed billable hours are harmful to the profession and 30% said "maybe" they should be phased out, suggesting that perhaps they should only be phased out when a widely accepted option is established. This poll follows an earlier ACLA/CLANZ survey of in house counsel which found that just 4% of in-house counsel endorsed the use of billable hours as the best approach to billing and 24% said they were dissatisfied with billable hours. A whopping 52% believed the use of time-charging was not ideal but they were not being offered alternatives.

As has been commented in other reports, try as they might, many law firms have searched high and low for viable alternatives to time based billing but alas have not been able to find anything apparently.

With all due respect to the forensic skills of some of those law firms, as those interviewed for the Lawyers Weekly article and the comments posted online confirm, (and as I and others have written about many times), there are viable alternatives to time based billing out there-plenty of them-which are being successfully used by an increasing number of innovative firms and their clients.

It would appear though, that many firms only see what they want to see and do not look all that hard for any real alternatives. To some degree this is understandable given the huge investment firms have made in their current time & people based leverage model. This investment extends to many firms measurement & reward incentives, their organisational structure, their practice management systems and of course it also permeates through their culture. Add all this to the innate conservatism of our profession, our fear of change and the fact that time based billing has arguably served the profession well over many years, it is little wonder that when it comes to pricing the status quo largely remains.*

Yet as the ACLA/CLANZ survey points out, far from being a negative for firms, clients are crying out for their law firms to provide them with a new pricing model. You would think wouldn't you that this should present wonderful opportunities for firms to re engage with their current clients & win over new clients with a different service offering? As ACLA chief executive, Trish Hyde, said the key overall message from the survey was that in-house legal departments wanted greater certainty about their legal bills. (surprise, surprise!).

“There is a gap between what law firms are able to offer and what in-house would like........for law firms, this is a pivotal is a real opportunity....if law firms can get it right, they will unblock a big problem that has existed in the relationship in pricing," Trish Hyde said.

One day the gap will close-and for some firms it may close quicker than what they anticipated.

In the meantime the innovators & early adopters quite rightly are entitled to the spoils.Just seems elementary my dear Watson.



* I know that there are now several different forms of billing options being used by some firms, but many of those options such as capped fees, blended rates, volume discounts, and the like are not really new pricing models ("fees ain't prices")- they are still primarily based around time and in my view are just billable hours in drag.