Last week, I read a post commenting on the “End of the Billable Hour,” which has become a hotter topic in the legal industry in the current economic situation and in light of Evan R. Chesler’s comments in the New York Times. In his post, Tim Marman discusses the idea that the billable hour “rewards inefficiency” and says that he hopes the trend towards flat rate billing will continue. With the current climate and initiatives like the Association of Corporate Counsel’s Value Challenge, it seems reasonable that the conversations about this will only continue.
While I agree with Tim’s comments, I don’t believe flat rates can be arranged for anything other than commodity work, and there are other alternative fee arrangements that can and should be made. During a webinar arranged for our members last Wednesday, Jim Hassett of LegalBizDev mentioned a few besides flat rate billing, including negotiated rates and hybrids, such as hourly rates plus success fees, capped fees with a safety valve, and value-adjusted hourly billing. It seems that it might be easier for mid-size and smaller firms to adjust to offering these types of arrangements than it will be for Big Law.