Billable Hours Targets & Bonuses: A Greater Misalignment of Interests is Difficult to Conceive

We have written and lectured extensively on previous occasions about law firms misaligned meritocracy structures and the capacity for that misalignment to encourage pricing behaviour that is sub-optimal for both the client and the firm. So, kudos to someone of the standing of Annette Kimmitt, the CEO of Minter Ellison, Australia’s largest law firm, who recently called out the billable hour as a poor measure of "client impact" as a result of which the firm proposes to revisit the way it acts as a "gateway" to bonus payments. (Australian Financial Review).

A former partner at EY, Ms Kimmitt questioned whether the billable hour was promoting the right behaviour. Despite complaints that it rewards inefficiency, it remains the dominant measure in the legal services industry – both for billing clients and calculating remuneration. Read more...

Cost is no deal-breaker for law firm clients

Only 4 per cent of fresh instructions for law firms is won on price, the largest ever client research project has shown.

Two thirds of business is generated through reputation and trust, with 30 per cent coming from existing clients, 19 per cent by recommendation and 17 per cent based on the people or character of the firm. Read more...

High Court judge allows £786 hourly fees but calls for rate review

A High Court judge has said updated guideline hourly rates would be ‘very welcome’ after allowing costs far in excess of the supposedly prescribed amount.

Mrs Justice O’Farrell allowed the successful defendant solicitors in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd to recover up to £46,000 in costs. The figure included grade C fee earners claiming around £436 an hour and grade B fee earners claiming £655 (both rates could rise by 20% if the defendant cannot recover the VAT as input tax). Read more...

Billable hours and bonuses not a good fit, says Minters boss

The head of Australia’s largest law firm has called out the billable hour as a poor measure of "client impact" and says she will revisit the way it acts as a "gateway" to bonus payments.

MinterEllison CEO Annette Kimmitt says every element of the legal consulting giant will be under the microscope as it embarks on a 2025 strategy.

Next week, there will be a series of "town halls" across Australia at which Ms Kimmitt will reveal the results of a firm-wide survey compiled over the past 11 months. Read more...

Most Innovative Legal Law Firm Operations Team of the Year: Fish & Richardson

Fish & Richardson’s pricing group and legal project management team have allowed the firm to do 31% of its work in connection with alternative fee arrangements, including innovative pricing plans, based on the number of patents and claims asserted in litigation. The Fish legal ops team is being recognized as the Most Innovative Operations Team at a law firm as part of California Leaders in Tech Law and Innovation Awards. The Recorder recently caught up with Carl Manning, the global director of litigation practice systems at Fish, to ask about the operations team’s mission at Fish.

The Recorder: How would you characterize the mission of the legal operations team within Fish & Richardson? Read more...

Law firms’ love affair with the billable hour is fading

Corporate clients have grumbled about the billable hour for years. It has been blamed for high rates of burnout in the legal profession.

Critics say charging by the hour is inefficient and opaque, yet it remains the mainstay of how most law firms charge clients for their work. Lawyers log their time in six-minute increments and are expected to bill 1,700 to 2,500 hours a year, or up to 7.5 hours a day. The system piles pressure on lawyers to hit demanding targets.

Law firms often cannot say exactly how much a piece of legal work will cost and this uncertainty means corporate clients often get a nasty shock when the final bill comes in. Read more...

The State of Legal Pricing: Whither Rational Pricing?

The state of legal pricing continues to evolve. From its early beginnings 10-plus years ago, it has become a mainstream role at most major law firms. That being said, the market still lacks true rational pricing, in the economic sense.

It is still difficult for clients and law firms to determine a value — price nexus. As a result, there remains a significant amount of chaos in the legal pricing market. This article examines the state of that chaos and gives a sense of where things are and where they might be headed. Read more...

The Process of Pricing: What Legal Lean Sigma® Can Show Us

I wrote previously about how important it is for law firms to understand their own economics in order to get a better grasp of their pricing performance. This time I discuss another aspect of the pricing mechanism — the process of pricing and how it can be improved.

We can discuss pricing and budgeting mechanisms, but it’s important to also look at pricing from a process improvement and project management standpoint. Or, more accurately, at the intersection of three concepts — process improvement, project management, and both of their relations to pricing. Read more...