The Death of the Billable Hour Has Been Greatly Exaggerated
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The billable hour is very much alive and well according to a new study by legal consultant The Blickstein Group Inc. which conducted a survey of more than 100 law department representations and found that the billable hour is still the most prevalent billing arrangement compared to alternative fee arrangements (“AFAs”). Corporate Counsel has more details.
Read original articleThe Billable Hour Just Won’t Die, Report Finds
While alternative fee arrangements are gaining popularity, data recently collected by the consultancy Blickstein Group Inc. shows that discounted hourly billing rates are still much more common than AFAs.
The Ninth Annual Law Department Operations Survey, produced by Blickstein in cooperation with the legal consulting and services company Consilio, looks at feedback from more than 100 law department professionals. A supplement to the report is available here. The full 45-page report, which was provided to Corporate Counsel, is available by request to Blickstein.
The majority of respondents—70 percent—said that between zero and 30 percent of their outside legal work is done through AFAs. Less than 2 percent of respondents said that between 71 and 100 percent of their outside legal work is done through AFAs.
A number of impediments to using alternative fee arrangements were offered by respondents, including a law firm’s unwillingness, not knowing which AFA to use and no internal impetus to change the current system. The greatest number of respondents, 36 percent, said the unpredictable nature of matter activity is the biggest thing standing in the way of using an AFA. The second-most-cited reason was a lack of data.
Law departments that want to use AFAs are in a position to make it happen, Josh Rosenfeld, vice president of legal services at legal services provider QuisLex, said in a Dec. 14 webinar about the results from the study. “Clients have way more leverage than I think they realize they do with respect to negotiating AFAs with their law firms,” he said. “And each of these impediments can be overcome and it is not a terribly high bar.”
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