Combating your lawyer's hourly billing ways

Karl Chapman offers some advice on what the law firm jargon means, and how to cut through it to get the best deal.

by Karl Chapman
Last Updated: 22 Jan 2016

The law has always used language in an interesting way: words play a key role in maintaining a certain mystique around what lawyers do. Along with regulation, myth and ceremony, language has in some ways protected the legal market from any serious competitive forces. 

This is changing. Yes, legalese will always play a role in legal matters, but customers are increasingly demanding that the advice they are given is clear, pragmatic, concise and straightforward to act upon. 

The greatest legal language battleground is around ‘fees’. For some, discussing fees is an uncomfortable experience. But the law is a profession with high ethical standards and a long tradition: many lawyers would argue that billing by the hour merely reflects the value that they provide. How can we charge fixed prices when we do not know how long the work will take, many lawyers ask? Hourly billing is in the clients’ interests, right?
Really? Welcome to the real world. 

Here is a quick guide to the language surrounding fees, and how the use of the word ‘fees’ itself, is (mis)used:

Hourly fees: Hourly billing is, generally, in the interests of law firm partners, not clients. It transfers risk to the customer and away from the lawyer. It incentivises the wrong behaviour. The longer a case takes the more a lawyer earns. The more letters that are written the more a lawyer earns. The more meetings that take place (with more lawyers in the room than you need)…you get the drift. Only use hourly billing when it suits you the customer. Otherwise insist on fixed pricing.

Alternative fee arrangements (AFAs): Many law firms boast about their flexibility and the fact that they happily embrace ‘alternative fee arrangements’. Scratch the surface and you find hourly billing models sitting beneath most AFAs. The irony here is the use of the word alternative. 

Fee-earners: This is the phrase that incenses non-lawyers in law firms most. It implies, in Orwellian tradition, that non-fee earners are good but fee-earners are better. It perpetuates the partner-centric view of the world that in both reward and status terms, non-fee earners do not contribute as effectively to the overall customer experience. This is nonsense. Indeed, not every piece of legal work needs an expensive lawyer or partner doing it. Ask how the firm intends to resource the case. Outsourcing may even be appropriate for parts of it with the lawyer acting as a legal project manager. 

Profit per equity partner (PEP): It is amazing that each year law firms shout from the rooftops about how much money their partners make. It is a statement of virility and is about as far from customer friendly as you can get. But of course, in the end, it brings us right back to hourly billing. Hourly billing is integral to the inefficient, top-heavy model of the traditional law firm partnership, where the figure that matters is PEP. But hourly billing has reached its sell by date. There are genuine pricing models where lawyers will share the risk with customers. Challenge hourly billing, there has never been a better time to do so.


Karl Chapman is Chief Executive of Riverview Law

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