One for all those doubting Thomases who tell me that no large firm will move away from the billable hour, no matter what their clients want. Law.com reports that the British company ITV has entirely phased out hourly billing for its legal work. The firms involved are Slaughter and May, Lovells, Addleshaw Goddard, DLA Piper, Olswang, Charles Russell and Goodman Derrick - not exactly lightweights. Of interest is that Freshfields have not been reappointed to the panel.
The article reports:
Garard told Legal Week: "None of the firms will bill us with reference to a measure of time on any matters. The pledge forms part of the agreement we have with the firms selected. As far as I am aware, we are the U.K.'s first major corporation to have such a panel. Hopefully people will sit up and take notice and other companies will follow suit."
Lovells ITV relationship partner Peter Watts said: "We always work with our clients to find new ways of working and new ways of thinking about our relationship. ITV is a very exciting client to work with and we hope to do much more with them in the future."
From an earlier report it appears ITV were looking to use fixed fees, caps and floors, with the rate based on deal completion.
Earlier this year, Freehills were recruiting a pricing analyst. All the top tier Australian firms offer fixed fees in certain types of work and on particular matters. But the billable hour remains the most comforting means of billing for law firms - it's what they are familiar with.
My advice to all clients is to ask. Until you ask you don't know what the answer will be. But look at how and what you are asking for. When I am working with client assisting in managing their legal costs, we put suggestions to the law firms about possible alternative billing arrangements, rather than simply asking the open ended question of "what can you do for us?" The answer to this question is often "we are interested in exploring alternative billing arrangments with you" with no solid proposals being put.
Clearly ITV put a lot of work into their RFP and were proactive in making suggestions about alternatives. It may well be that they were also proactive in the whole tender process, with feedback about level of work and possible alternatives. If your proposal has any element of "success fee" you will need to define what "success" means. You may need to look at how the law firm contributes to that success.
But the payoffs in certainty of fees make the process very worthwhile.