Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/98265
What type of billing arrangement do you have with your primary law firm? have to,��� and that makes sense to me. I think that���s something law firms can provide but I don���t think we���re necessarily seeing a big change away from billable hours.��� Chisholm questions whether discounts offered are really discounts at the end of the day. ���I think if you get a 15-per-cent discount sometimes lawyers are at least encouraged by their business model to charge 15-per-cent more hours to a file.��� Ultimately, it���s the entire billing/rela- 6.7% Alternative arrangements Combination of billable hours plus flat fees 35.7% 2.2% Flat fees Billable hours 55.4% followed by ���be more practical��� at 30.4 per cent and ���be more concerned with results��� at 35.1 per cent. However, as much as the majority of in-house counsel indicated they want to pursue alternative billing arrangements and get more value, most said they still default to hourly billing ��� 55.4 per cent said the billing arrangement they have with their primary law firm is based on billable hours (up from 50.5 per cent last year) while 35.7 per cent is based on a combination of billable hours plus flat fees (down from 42.9 per cent last year). Just 6.7 per cent said they had alternative arrangements, the same as last year. Some survey respondents indicated they are negotiating various forms of discounts with their firms. ���It doesn���t surprise me because it���s the easiest,��� says Borbridge of the number using billable hours. ���It���s simple, everybody knows how it works, and I���m not sure we can reasonably expect that law firms are going to put together arrangements that will reduce their revenue over time. They might find ways to do more work for us for the same amount but it���s not in their interest to reduce their own revenue.��� When it comes to repackaging how law firms charge for their services, Borbridge says it���s more likely firms will assist in managing costs rather than reducing them. ���There might be ways to monitor the legal cost more accurately so that they might say, ���Hold on, lets not proceed on this portion until we know we absolutely tionship model that needs to be addressed, she says. ���Inevitably where the business model wants to take us is that there is some risk shared by the client and the external firm because as long as the external firms continue to bill by the hour and reward their lawyers for the number of hours billed, those external lawyers are going to be fundamentally operating in a conflict with their client���s best interest in this way,��� says Chisholm. IH When it really matters. Appeals Opinions and Risk Management Mergers & Acquisitions Claims against Professionals and Fiduciaries Directors��� and Of���cers��� Duties and Liabilities Class Actions Toronto: 416 867 3076 ca na dia nl awy e rm a g . c o m / i n h o u s E Lerners-1/2_IH_Aug_11.indd 1 London: 519 672 4510 www.lerners.ca December 2012/January 2013 ��� 8:42:12 AM 37 8/16/11