By Margot Slade
N.Y. Times News Service
It has been the bedrock of the lawyer-client relationship for
decades: the billable hour, that chunk of time-on-legal-tasks for
which many lawyers have uninhibitedly charged and most clients
have unthinkingly paid.
But now the ground is shifting in response to increased
competition among law firms and to diminished revenue among law
firms and clients alike. And that shift, particularly in
corporate law, has begun to bury the hourly rate in a welter of
cost-cutting alternative billing schemes. In some cases, firms
are even being forced to bid for corporate business.
The tremors of this change, first felt a few years ago, are
now rippling through law firms from coast to coast.
"Clients are talking about fixed fees, capped fees, fee
estimates, contingent fees and discounts," said Blane R.
Prescott, a partner with Hildebrandt, a management consulting
company based in Somerville, N.J.
"They want to see a budget, something that will give them a
better idea in advance of what a law firm's services will cost.
They want to discuss that budget and how it was developed."
Given a glut of lawyers and a dearth of clients, Prescott
said, "clients are getting what they want."
Others who monitor the legal profession agree. Although there
is no comprehensive national survey to buttress their view or to
document the extent of savings for clients, "anecdotal evidence
and our own recent, small-scale survey confirm the trend that we
perceived: law firms increasingly moving to alternative billing
approaches at clients' request," said Richard C. Reed, chairman
of the alternative billing task force for the American Bar
Association's law practice management section.
Those alternatives are a central element of an accelerating
revolution, driven mostly by clients, in the way the nation's law
firms do business.
It is, industry analysts say, a cultural revolution that puts
a premium on serving clients, not racking up hours, and on
producing quality work, as clients define it: work that places an
emphasis on timely performance, efficiency, risksharing between
the firm and its clients, and the firm's willingness to discuss
how cost estimates were arrived at.
Although the revolution is being powered by the muscle of
corporations, those Goliaths of law firm clientele, some benefits
are trickling down to David as well.
Particularly in estates, trusts and other areas of family law,
where the preparation of documents is increasingly automated,
individual clients can frequently obtain services for a fixed
To clients, the sea change promises value for money. To law
firms, it underscores efficiency as a requisite of long-term
client relationships. And to individual lawyers within those
firms, it brings a shift in performance standards.
In firms that embrace the new approach, partners are rewarded
for their marketing and management abilities, "especially for
their talent in pricing legal services and supervising legal
projects," said Ward Bower, a principal at Altman Weil Pensa, a
Philadelphia-based legal management consulting firm.
And associates, he said, are "judged on how effectively and
efficiently they serve clients, as against how many hours they
One benefit of all this is that an associate who is trying to
balance family and career, for example, can be judged on
something other than hours billed, said Peter D. Zeughauser, vice
president and general counsel of Irvine Co., a real estate
development concern in Newport Beach, Calif.
The "down side," Bower said, is that as law firms turn leaner,
they will need fewer lawyers. In the wake of vast numbers of
layoffs that have already resulted from a weak economy, even more
associates may be finding themselves out of jobs.
"Our object is to procure the right quality of legal services
in the most cost-effective way," said David Grimes, vice
president and director of administration in the legal department
of the Bank of America. …