Legal Research

The Death Of The Billable Hour And The ACC Value Challenge ? Essential Reading For Lawyers And Clients Alike

By Dan Pinnington

The death of the billable hour has been (allegedly) imminent for at about two decades now. But by most accounts, at least until recently, the billable hour has remained as healthy as Mark Twain was when he responded with his famous quote to the rather incorrect rumours of his passing. (He actually did this twice with two slight different quotes - read more here)

I included the at least until recently above because I am seeing evidence that things are finally changing, at least in the corporate and larger firm worlds (and no doubt it will trickle down to smaller firms and non-corporate clients). The current economic woes seem to be causing some clients to demand alternatives to the billable hour. As money is tighter these days, the drive behind this is nothing more than getting better value for the money spent on legal fees. Firms that want the work have little choice to respond to client demands, often with detailed answers to client RFPs that set out fees based on other than simple billable hours.

Question for the lawyers: Is your firm ready to make this change? (Stated a slightly different way: By matter type do you really know what it costs to handle the various types of matters your firm handles?)

Question for the clients: Do you understand the ways you can get more value for your legal spend?

Question for both: Have you talked to each other about this?

I suspect the answer to these questions for many law firms and their clients is no.

If you are a lawyer or a client and answered no to the above questions, you should visit the Association of Corporate Counsel?s Value Challenge website. The ACC has put together a truly amazing online resource to help clients and their lawyers understand what clients really need, want and are willing to pay for. While really aimed at corporate law departments and bigger firms ? much of the content on this site is helpful and relevant to lawyers at firms of all sizes and their respective clients.

The premise for this resource is that many traditional law firm business models and cost management strategies (read reward more billable hours) are not aligned with what corporate clients really want and need: value-driven, high-quality legal services that deliver solution for a reasonable cost and develop lawyers as counselors (not just content-providers), advocates (not just process-doers) and professional partners.

The site includes some “Meet/Talk/Act” guidelines to help law departments and law firms open the dialogue on these issues. (And, I?m all for more lawyer/client communication as it can help alleviate the most common cause of legal malpractice claims ? poor lawyer/client communication. See my LAWPRO Magazine article on the most common malpractice claims.)

To help you make changes there is a Toolkit that includes resources and tools on the following topics:
* Structuring Relationships
* Budgeting and Staffing
* Performance Management
* Teamwork & Communications
* Leveraging Knowledge

And the ACC also commissioned a major economic consulting firm to develop a computer-based model of basic law firm economics. This model allows in-house counsel and law firms to test assumptions and input data (for example, numbers of associates and partners, rates, overhead, etc.) and see how changes in these and other factors can affect a firm’s efficiency and profitability. Wow!

Kudos to the ACC wants for promoting a discussion on these issues between lawyers and their clients. If you want to succeed you need to make time to review and consider the content on the ACC Value Challenge site.

Full post as published by Slaw.ca on April 15, 2009 (boomark / email).