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Screeds have been written for more than two decades about the demise of the billable hour. Like Mark Twain, news of whose death was greatly exaggerated, the billable hour persists with all the tenacity and survival skills of a cockroach emerging from a nuclear winter.

And so it will persist despite concerted efforts by some on both the buy and sell sides to eradicate it as an unwelcome if not toxic blot on the law firm management landscape.

Businessmen-Confrontation

[Partner] 'Do you want to be billed by the hour or do you want value pricing, a fixed fee or something else?'

[Client] 'Well that depends on which is going to work out best for me, and by the way, despite what I might agree to at the outset, I reserve the right to change my mind and make my final choice after the event. You know, like putting it all on red after the Roulette wheel has stopped.'

While I doubt that many lawyer/client conversations actually unfold in such nakedly brazen terms, the net effect of some clients' expectations along such lines can leave the lawyer wondering whether the client is being deliberately obtuse or just commercially belligerent.

Screeds have been written for more than two decades about the demise of the billable hour. Like Mark Twain, news of whose death was greatly exaggerated, the billable hour persists with all the tenacity and survival skills of a cockroach emerging from a nuclear winter.

And so it will persist despite concerted efforts by some on both the buy and sell sides to eradicate it as an unwelcome if not toxic blot on the law firm management landscape.

But why will it persist? Quite simply, because many clients want to keep it as part of their pricing arsenal. Yes their arsenal. They don't want to get rid of it because sometimes it suits them to insist that they are charged by the hour. Just ask any lawyer who gives a client a fixed fee up front and sticks to it, delivering the job on spec and on time, only to have the client insist that the time records are coughed up and by the way, 'I am only paying the lesser of the fixed fee or the time records.'

Or take the lawyer who agrees to 'value price' negotiations for a client with the Revenue to reduce a tax liability of £1 million. 'How about I charge you 5% of whatever savings my unlitigated negotiations extract and if there is no saving, there will be no fee'. The client agrees – that seems a very fair deal; budgetary certainty, transparency up-front and alignment of the firms' interests with those of the client. What's not to like?

The tax lawyer, through a combination of superlative skill, technical knowledge, experience and the respect of senior people at the Revenue cultivated over thirty years, coupled with powerful advocacy results in not a total victory but a substantial saving of £700,000. The agreed fee would be £35,000. 'But wait, you only spent 40 hours on that at £600 an hour, so I will pay you £24,000' - unprincipled, disingenuous and opportunistic!

If the client had opted for hourly billing from the outset and the lawyer's efforts were completely unsuccessful, would the client have still been happy to pay £24,000 with nothing to show for it?

Experience teaches us that many/most clients would expect us in such circumstances to 'take a haircut' – you know, as a goodwill gesture, in the broader interests of the relationship, because we put a lot of work your way, swings and roundabouts… Bollocks!

If the lawyer attempted the same behavior, they would likely, and quite rightly, be the subject of a conduct complaint to the regulator. Why then does such behavior occur? Like all aberrant behaviour it occurs and persists solely because it is tolerated.

Frankly, partners need to harden up. Yes, I know, they are a great client (really!?), they spend XYZ with us, they have been with us 15 years, they will go elsewhere (good riddance?) etc. But let's not forget that they also frequently attract some of your lowest rates, lousy realisation, and they are often tardy payers and very demanding. They or clients like them are why you hate your job some days.

Pricing capability and effectiveness is only 50% technical pricing skills, firm-wide resources and so forth. At least 50% is about individual partners pricing confidence; something that every firm we have worked with tells us is in desperately short supply.

So, back to our mercurial and hypocritical client who wants hourly billing or value pricing – or not – it depends. What to do? We have for a long time espoused up-skilling partners to be able to craft and articulate to a client on each specific matter a 'menu' of pricing options, something we have captured in a methodology called Validatum Price Customisation®.

Once the client has made an informed choice, they must be held to it, in the same way we are stuck with the client's choice whether it plays out to our benefit or not.

If you do not visibly impose that rigour and accountability, the market and your clients will come to understand very quickly that you are full of hot air and that if they grizzle, you will capitulate.

As an alternative strategy, you might consider rewarding such delinquent behaviour by recalcitrant clients with the adoption of Voltaire's view about how the English used to breed better Admirals (after the execution of John Byng in 1747) – that is, occasionally to shoot one; 'pour encourager les autres'.

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