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Alternative Firm Arrangements surpass Alternative Fee Arrangements for cost control

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With all the hullaballoo about fees – discounts, fixed, blended, effective, contingent – we have overlooked a much more significant lever to shift costs: the law firm and its staffing and billing practices. A firm’s number of lawyers and its billing ethos go together; bigger firms have a bigger cars to move, so to speak, and therefore press harder on both the staffing and billing pedals.

I am gravitating toward the belief that law departments need to change firms, not fees, to really move the needle. Put metaphorically, a fixed-fee arrangement with an expensive firm is hoping the emu can high jump. Hourly billing by a frugal firm is not worrying about a hummingbird over-eating.

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One response to “Alternative Firm Arrangements surpass Alternative Fee Arrangements for cost control”

  1. Kevin Chern says:
    May 2, 2011 at 4:56 pm

    Don’t you think that the way a firm bills often reflects the way that firm operates as a business? For example, attorneys who use subscription-based models usually have a practice of regularly checking in on clients, doing proactive status updates and offering other services that a client might not get for a strict flat fee or hourly billing. People who bill hourly may be more focused on finding billable tasks, whereas firms that focus on flat rates may provide unbundled services or focus on efficiency rather than wasting time on non-essential tasks. While many people may focus on the fees in the headlines, any fee structure discussion in reality often goes hand-in-hand with a discussion on how the firm runs its business.