Time for change
Ever-rising fees charged by law firms are a perennial issue for general counsel, and never more so than when the economy turns sour. With the economy turning even more sour by the day, the question on the lips of many in-house lawyers is whether this is the time for clients to push for long-desired changes in billing practices.While in theory the increasing likelihood that the UK is entering a full-blown recession should be the ideal driver for clients to more forcefully assert their power as purchasers, the signs are mixed as to whether we are to see a major shift in the dynamic.Despite a certain reticence from in-house lawyers, it is unquestioned that there is widespread discontent with the status quo. Last September, research by the Commerce and Industry Group (C&I) found that 82% of in-house lawyers felt hourly billing provided no incentives for law firms to be efficient.According to the report, 74% felt that hourly rates left room for partners to pad their bills and almost half (43%) claimed felt that they were subsidising pay rises for junior staff with their fees.Prior to the C&I report, Legal Week research from June found that three-quarters of partners at top City firms thought fees would rise in the coming year. Almost 20% claimed that the rises would be above the rate of inflation.Emma Kaye, a consultant with Hildebrandt International, says the financial downturn has indeed presented an opportunity for clients to secure better deals from their advisers.She comments: "Clients have increased their purchasing power over time and it has been intensified by the current economic conditions. This purchasing power is strongest for the more routine types of legal instruction."
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