Despite tales of the end of the billable hour, traditional billing method persistently resonates in law practices across the country according to the Canadian Lawyer survey. The survey says results strike an optimistic tone among lawyers and firms, none of whom anticipate a fee reduction, with nearly half expecting to introduce an increase in 2019.
Flat or blended?
The billable hour is still used by 88.56 per cent of lawyers, although 62.71 per cent use flat rates and 33.56 per cent rely upon contingency fees, consistent with previous years. A combination of flat fees (62.87 per cent) and an hourly rate (88.61 per cent) are the most common means used to charge clients for firms of all sizes, although blended hourly rates are used by 34.38 per cent of firms with more than 26 lawyers. Small firms with fewer than four lawyers indicated their use of non-hourly billings or alternative fee arrangements are largely (80 per cent) proactive, while 65.91 per cent of firms with five to 25 lawyers indicated that it was proactive. But the numbers were flipped for firms with 26 or more lawyers, with 70 per cent indicating the move was reactive.
No fee drop
In setting flat fees or hourly rates, most firms with fewer than four lawyers (76.81 per cent) indicated they compared their fees to that of other lawyers in the same practice area. That was consistent with the larger firms, indicating an overall average over all-sized firms of 80.35 per cent; although 56.77 per cent of respondents of all-sized firms indicated that the fees and rates are based on changes in firm costs and/or inflation. The result is that none expect to drop their fees this year and an almost equal number of respondents in all firm sizes indicated they would keep the charges the same (47.64 per cent) in 2019 as they were in 2018 or raise them (44.64 per cent). This is the second consecutive year in which there will be no reductions. Among all firm sizes, 40.78 per cent anticipated increases to be less than five per cent, while 45.63 per cent anticipated the range to be between six and 10 per cent. Another 9.71 per cent indicated the increase would be between 10 and 20 per cent. Higher overhead costs (50.49 per cent), increased complexity (40.78 per cent) and inflation (62.14 per cent) were cited in the survey as reasons for increases in law firm billing rates this year.