Allocatur

Edward De Bono and Alternative Billing

Many lawyers don't see any need to adopt alternative billing other than in what they see as "commodity" work, such as conveyancing.  However, a post by Tom Kane, which refers to William C Cobb's Cobb-Value Curve to demonstrate that the types of work now considered to be commodity work is increasing, and therefore the total percentage of a lawyer's work likely to attract alternative billing in also increasing.

Part of the problem, certainly for Australian lawyers, is that they equate "alternative billing" with "fixed fees".  Whilst Australian lawyers are far more restricted than many of their American cousins in the range of alternative fee arrangements they can enter into, (by reason of restrictions in the various Legal Profession Acts), there are many options other than fixed fees.  For non-litigious matters, fees can be tied to the value of a transaction, level of success in a transaction, and even for litigious matters, fees can be tied to meetings specified targets, such as time period for settlement, or achieving progress in a matter within a particular time period.

Time for a bit of lateral thinking - so start reading Edward De Bono!

US Courts to Encourage Competitive Bidding to Control Costs?

The National Law Journal reports on US judges using competitive bidding to select lead counsel in securities actions - one of the reasons to justify this position being that there is often little oversight of the conduct of the matter by an actual client.

The practice was introduced in the early 1990s, but the was frowned upon by some courts in 2000 and 2001. However, the judge who introduced the practice has urged Congress to codify such auctions to save investors money.

In 2003, the New York Law Journal reported on the use by GE Commercial Finance of online auctions for legal services and other GE groups followed this with further online auctions in 2005. Any such auction would need to carefully take into account the services and skills on offer from bidders to ensure a comparison of "apples with apples". Lawyers have complained that such auctions are labour and time intensive, and the recommended strategy is that adopted in any auction - set a limit (in this case a bottom line) and stick to it.

As with any negotiations on fees, a law firm must clearly identify:

• What is the cost base?
• What is the scope of the work?
• What are the client expectations?
• What is value to the client?
• How will the firm deliver the work?

This can be more difficult with on-line bidding as the opportunities to identify scope, expectations and value are more limited.