Law firms look for alternatives to the billable hour

A transformation is underway in the polished hallways and corner offices of Washington's venerable legal industry. Law firms, like many businesses trying to regain their footing after the recession, are rewriting one of the most basic components of the business model they've clung to for decades - the way they charge companies for legal services. The shift is a reaction to the significant increases in billing rates over the last 10 years, and businesses have begun a concerted effort to "insource" more legal work several years ago. Firms are moving away from traditional hourly billing to what's known as alternative fee arrangements largely because their biggest clients - corporations - have been pulling back. Businesses are relying less on law firms and assigning more work to their own company lawyers, according to a recent study of nearly 6,000 in-house attorneys in the United States and abroad by the Washington-based Association of Corporate Counsel. While top law firms will always have a place at the table for bread-and-butter specialties like litigation and acquisitions expertise, the survey indicates that firms' stronghold is eroding even in those key areas. The percentage of in-house lawyers who used outside law firms for work on taxes, mergers and acquisitions, intellectual property and litigation are all down compared with five years ago. Alternative fees include any billing arrangements that are not hourly, such as flat fees, contingency fees and what are known as "collars," where lawyers and clients agree on a flat amount, and lawyers will offer a discount on the difference if they exceed the agreed-upon number. Law firms, for their part, seem to be getting the message. In a recent survey of the 200 biggest firms in the United States by the legal trade journal the American Lawyer, 92 percent of firm leaders said they used flat fees for at least one entire matter in 2011, and 82 percent used collars.Fonte:Migalhas