Alternative fee arrangements are increasingly capturing the attention of innovative law firms, as well as fee-sensitive clients.
So when a lawyer like Omaha labor lawyer Ross Gardner went to Orlando to speak at the human resources conference held by one of his firm’s biggest clients, it was a trip the Jackson Lewis lawyer may not have gotten to make at all.
Jackson Lewis had made an important policy change regarding firm billing. They changed the billable hours tallies from the firm’s assessment of compensation and job performance evaluations. In Omaha, where the 800-lawyer Jackson Lewis has 18 lawyers, it was an important development.
Without one eye firmly on the billable-hours sheet, Gardner felt free to make the Orlando trip, where he gave a 45-minute talk on developments within the law pertaining to the National Labor Relations Board.
“I was able to take two full days out of my schedule, learn about one of our best clients and cement relationships with their human resources people,” Gardner said.
Ranges vary, but typically, associate lawyers are expected to bill clients for 2,000 hours of work per year; doing so typically requires 60 hours to 80 hours of work per week, because not every hour of work is a billable hour. Reaching the target is by no means an impossible task, and lawyers at all levels are well-compensated compared with the average person.
“But it is something that is always weighing on your mind,” said Gardner, who is in his sixth year with Jackson Lewis.
Jackson Lewis said it has eliminated the billable-hours calculation from the annual performance review not because it expects attorneys to work less, but because more clients are opting for flat-fee payment arrangements in which billable hours play no part.
“It makes for more of a collaborative effort,” said Chad Richter, a partner in Jackson Lewis’ Omaha office. “For many clients, their litigation and total legal spending go down.”
In such arrangements, clients select from a menu of options. In the labor and employment law in which Jackson Lewis specializes, it might mean paying a set amount for a full year’s worth of updates to the employee handbook, unlimited assistance with training people in the personnel department, or A-to-Z services related to lawsuits. Attorneys working on such projects don’t bill by the hour and clients don’t pay a cent more than they negotiated up front.
According to a bulletin on the topic posted on the American Bar Association website, alternative fee arrangements are a response to “the $1,000 an hour lawyer” and can take many forms. There are setups in which all lawyers working on a matter get the same hourly rate, regardless of experience, and contingency contracts that specify lawyers get paid only if they achieve a certain result.
But the straight billable hour still reigns supreme in U.S. legal practices. Alternative-fee arrangements accounted for only 16 percent of revenues at the largest U.S. law firms in 2010, according to the latest wide-ranging survey on the matter, conducted by American Legal Intelligence.
Jackson Lewis, whose Omaha office used to be known as Berens & Tate, is not the only firm in town applying alternative fee and compensation strategies.