Over the last few years I have asked law firm partners how they would manage differently if they were not billing by the hour. The question was met by intrigue to say the least, but all concluded with much certainty that “this will never happen”. Nonetheless, in response to client demands, large law firms are indeed starting to offer alternatives to hourly billing, including fixed fees and success fees, and it is likely that others will follow suit in order to stay competitive. The Legal Services Act is set to further reshape the competitive landscape of legal advice, giving clients more options in the pressure to reduce their legal budget.
This is the moment for law firms to ask themselves how they can become more efficient in acquiring and managing cases and transactions, talent and knowledge in the context of these industry changes. In answering this question, law firms can gain insight from what other professional services firms (PSFs) that bill according to assignment or performance, such as investment banks and consulting firms, have successfully implemented and refined for years.
