26 Jun 2019

Firms sticking to billable hours

Law firm websites talk up alternative fees but reality is somewhat different says analysis.


Three out of four top 100 big law firm websites mention alternative fee arrangements (AFAs) but the billable hour likely to remain in place pricing experts say, according to Bloomberg Law analysis.


The legal industry seems slower in adopting the practice of ALAs than suggested by the sites, says the Bloomberg Law analysis. Law firms are largely sticking to the billable hour, even as corporate clients continue to agitate for cost certainty, the analysis found. Law firm pricing experts says the billable hour is a recurring source of friction between law departments and outside counsel as the client side seeks cost savings. However, it is likely to remain in place as the dominant way companies pay their firms for the foreseeable future. One of the barriers to broader adoption of AFAs and different pricing models by clients or law firms is the scarcity of billing technology. Corporate counsel also find they still are often unable to define their pricing needs.


The analysis states that it is clear law firms are aware of the pressure to adopt AFAs, and they like making them a part of their marketing. Almost three in four of the AmLaw 100 firms - 74 of 100 - mention them on their websites, according to the analysis of websites by Bloomberg Law. Many tout their openness to using them, some with “detailed pages on firm pricing approaches.” A recent Bloomberg Law Legal Operations & Technology survey indicated actual adoption of AFA’s, at least for tech-related reasons, remains low. When asked if they changed their billing models as their use of technology increases, 75 percent of respondents who were aware of their firm’s billing practices said “no.” The survey also found that the largest firms, those with more than $1 billion in annual revenues, are more likely to adopt alternative billing models.