When a law firm agrees to handle a matter for a flat fee, it must find a way to meet the client’s needs within that fixed budget. Assuming the client is satisfied, the less a firm spends, the more money it will make. But, as the CFO of a firm with more than 1,500 lawyers explained in a survey I conducted recently on alternative fees, most lawyers have worked their entire careers under the billable hour model, in which “the more hours that got charged, the more money [they] made. And so they’ve never really had to manage [budgets]“.

Several other participants in my survey pointed out that project management principles could help lawyers who need to deliver quality solutions within fixed-fee arrangements. The chairman of a firm with more than 800 lawyers, for example, noted that “in the world of construction, architects, engineers, and contractors have been working on a fixed-price basis … for a long time … . There is a body of learning … about how to estimate, how to contract, how to define scope, how to manage changes, allocate risk, how to manage fee disputes, delays, [and] changes in scope [that could] be adapted to the legal profession.”

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