What’s the most popular way for legal teams to charge law firms?

New research has uncovered the various fee structures offered and implemented by in-house legal teams when it comes to working with law firms, and the extent to which those structures are utilised.

The 2019 Global Legal Department Benchmarking Report, penned by The Association of Corporate Counsel in partnership with Major, Lindsey & Africa, surveyed 508 legal departments across 30 countries and 71 industries.

“Law firm convergence and alternative fee structures are topics of serious interest for corporate legal departments as the pressure to do more with less and to demonstrate value to the business only continues to grow,” ACC wrote. Read more...

Fee income up for top-100 firms

The UK’s top-100 firms increased their average fee income by 7% in the year to 30 April 2019, according to a regular sector snapshot. Deloitte’s quarterly legal sector survey attributes the growth to a rise in the number of fee earners and an increase in rates recovered. The figure is only slightly lower than last year’s 7.7% growth.

Income per fee earner also grew, rising by 3% year-on-year.

Deloitte said it was still concerned for the future, however, noting a marked slowdown in growth in the quarter ending 30 April. Fee income grew by just 3% in the final quarter and fees per fee earner fell by 1%. Read more...

Ten sought after skills for legal project managers.

What skills and attributes are most sought after of legal project managers given current market trends?

Legal project manager roles are much more plentiful than when I started my consultancy and this blog site in 2012.

By way of illustration, when preparing this article I searched for legal project manager vacancies on LinkedIn: the initial search result showed 10 vacancies, all with law firms based in London. Read more...

Kirkland's Push Into Contingency Fee Litigation Not Threatening, Firm Leaders Say

Trial lawyers said Kirkland, for all its resources, comes into a contingency fee practice with some disadvantages.

In the wake of Kirkland & Ellis’ announcement that it is “doubling down” on contingency-fee litigation, you might expect lawyers who take on such matters to worry about competing for clients with Big Law’s 600-pound gorilla.

But in interviews, leading litigators at other firms said they’re not sweating the news. They said there’s enough work for everyone and that Kirkland’s big client base and full-service offering could work against the firm in some ways. Read more...

The Law Firm Disrupted: Why the Billable Hour's Demise Is Greatly Exaggerated

Experts insist the billable hour creates warped incentives and clients want alternatives. Really?

The Billable Hour’s Demise: Greatly Exaggerated?

I’m going to talk about Kirkland & Ellis again, but not for long. When Big Law’s alpha dog said it was going to make a new push into contingency work, my colleague Jack Newsham checked in with some of the litigation shops that are already thriving on this work.

Unlike Kirkland and its full-service brethren, boutiques like Susman Godfrey and Bartlit Beck have more or less sworn off the billable hour for years. It’s in their DNA. Read more...

How Well Do Law Firms Understand Their Own Pricing Economics?

It’s been more than three years since I wrote my “Alphabet Soup of Law Firm Pricing” series for the Legal Executive Instituteblog. That series focused chiefly on the rise (at that time) of the new-fangled concept called alternative fee arrangements (AFAs) and how law firms were using them.

Now, years later, AFAs have become a sort of shorthand for pricing in general, and pricing itself has evolved into one big umbrella that impacts every law firm in a lot of different ways. It is startling that recent survey results show that over the last few years the number of law firms being proactive about pricing and starting initiatives to address how they could better price their legal services has actually dropped from about one-third of firms to maybe now just more than one-quarter of firms being proactive. The rest are just being reactive to the pricing situations in which they find themselves. Read more...

Defending Your Rates

Altman Weil’s annual Law Firms in Transition survey is always an interesting read. In taking the temperature of managing partners and chairs of hundreds of the country’s biggest firms, Altman provides valuable information for in-house as well as outside counsel. In this year’s survey, for the first time in many years, firm leaders were buoyant. “Lawyers are busier,” report Thomas S. Clay and Eric A. Seeger, the authors of the survey report. “Firms raised their rates more aggressively than in previous years and clients paid the increases.” Unlike previous years, however, when fewer than half of firms would cop to aggressively increasing billing rates to boost profitability, more than 80 percent of the 500 biggest firms in the U.S. fessed up this year. Interestingly, Altman tacked on a new question this year that elicited responses that likely raised some hackles with the CLOC crowd. “If challenged by a client,” they asked, “how would you justify your firm’s most recent rate increases?” The report categorizes the responses and ranks them by frequency.

1. Our costs are up. “Firm costs continue to increase each year and many clients now have third-party vendors ‘auditing’ our bills (often unfairly) which has significantly reduced profitability.” Read more...

Associates Just Want the Truth About Billable Hour Requirements

Law firms need to be honest about what they expect, our Young Lawyer Editorial Board writes.

Across virtually every occupation, employers have developed ways to communicate expectations to employees and to subsequently track their contributions. For a store clerk, it may be a shift calendar and a punch clock. For a salesperson, it may mean sales goals. For law firms, the billable hour—that commonly used, and just as commonly reviled, measure of client hours worked—often serves as the principal means by which to measure the contributions of their lawyers and apportion compensation. It’s long past time for a fresh look at billable hour requirements.

Before you stop reading, let’s be clear that this is not another article foretelling—or seeking to hasten—the death of the law firm billable hour requirement. It won’t happen for a long time, nor necessarily should it. Used appropriately, billable hour standards can set clear expectations for lawyers and supply a dose of objectivity to measuring their contributions, ensuring that comparable work receives comparable reward. For instance, a lawyer who has had an extraordinarily busy period of firm or client work should be recognized and compensated accordingly. Read more...