LawFuel.com – Survey Finds Majority of Non- Hourly Billing Arrangements
Prompted by Law Departments, Not Law Firms
NEW YORK AND WASHINGTON, D.C. (November 30, 2009) – Thirty-nine percent of in-house counsel surveyed by the Association of Corporate Counsel (ACC) and The American Lawyer reported that their use of alternative billing arrangements with outside firms increased this year. The work, however, remains only a small fraction of their docket, with 47 percent of the GCs surveyed indicating such fees account for no more than ten percent of their annual outside legal spending. Nearly a quarter of respondents said they didn’t use any of these arrangements.
The survey also found that changes to non-hourly billing arrangements were almost always initiated by law departments rather than their firms. Almost 50 percent of GCs said that they had used flat-fee billing this year for an entire legal matter; the percentage was even higher (60%) for GCs at companies with more than $1 billion in revenues. While 64 percent of GCs at large companies reported using some type of alternative legal staffing this year, including outsourcing, contract lawyers and secondments, only 32 percent of the total group surveyed had utilized this approach.
The ACC/TAL study surveyed heads of corporate law departments and the Am Law 200 law firms, the 200 top-grossing firms in the United States. The survey was conducted in October 2009; 587 general counsel and chief legal officers responded to the online questionnaire. Of the 142 Am Law 200 law firm heads that responded to similar questions as part of The American Lawyer’s annual Law Firm Leaders survey, four-fifths said they used flat fees in the past year; three-quarters had at least one incentive or success fee; and one-quarter outsourced work to lawyers working for third-party providers.
“Clearly the legal marketplace is changing,” said Aric Press, editor in chief of The American Lawyer. “The move to fees based on something other than billable hours is steady, if still small. Firms and clients alike are experimenting with different structures even as each side fears getting taken by the other. It’s an uneven landscape and an occasionally bruising one. Half the clients said they had dropped at least one law firm this year. Thirteen percent dropped four or more.”
“These results provide an important barometer of how in-house and outside counsel are changing the way legal services are managed and priced; they confirm what we’ve been hearing in our ACC Value Challenge sessions,” explains ACC Senior Vice President and General Counsel, Susan Hackett. “With surveys like this as a baseline, we predict an exponential increase in value-based relationships going forward. If 2009 was the year the markets required clients to perform “give-me-a-discount” triage, then 2010 promises to be one where longer-term, sustainable business model changes are instituted.”
Survey results are available in the December issue of The American Lawyer as part of the magazine’s report on “The Change Agenda,” a special package profiling the tidal wave of recession-driven challenges and changes facing law firms. Portions of the report are also available online at www.americanlawyer.com. Complete survey results are also available to ACC members by contacting ACC Membership: [email protected]
With more than 25,000 members in over 70 countries, employed by over 10,000 organizations, the Association of Corporate Counsel (ACC) is the world’s largest organization exclusively serving professional and business interests of attorneys who practice in legal departments of corporations, associations and other private-sector organizations. As the ACC Value Challenge gains momentum and more in-house counsel and law firm attorneys seek ways to reconnect value to the cost of legal services, ACC continues to promote common interests of its members and provide a voice on issues of global importance. For more information on inside/outside counsel relationships, visit 2009 ACC/Serengeti Managing Outside Counsel Survey. ACC online: www.acc.com | Twitter http://twitter.com/ACCEducation.
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