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ATTORNEY BLOG: Validating our support of alternative billing arrangements

By: David B. White, Esq.

When our firm was founded in 1987, we sought to bring a progressive, pro-active approach to representing our clients, with the goal of creating innovative solutions while maintaining the highest legal standards.

Our attorneys were to see themselves as advisors who worked to understand our clients’ businesses and anticipate their needs. We understood then – as we do now – that clients and potential clients regarded return on investment as a leading criterion in choosing their legal counsel. History has demonstrated that we haven’t forgotten these core values, especially in regard to our decision to explore alternative billing arrangements with clients right from day one.

Several recent measurements, including The American Lawyer’s 2010 Survey of Leaders of America’s 200 largest law firms, have validated this strategy. According to the survey, 91 percent of respondents said their firm used a flat fee for entire matters in 2010, up 9 percent in just one year, and nearly 93 percent used a flat fee for at least some stages of matters, up 25 percent from 2009.

Those of us with corporate clients should also take note of the results from a survey of 453 corporate chief legal officers and general counsel conducted by the American Association for Corporate Counsel (ACC) and The American Lawyer. A total of 53 percent of general counsel polled revealed that they used flat fee billing for an entire matter, an increase of 5 percent from 2009. The 128 general counsel polled from companies with revenues of $1 billion or more used alternative billing arrangements more than 62 percent of the time and only 13 percent said they didn’t use alternative billing arrangements at all.

Even more revealing are the actual words of general counsel about their experiences with alternative billing arrangements. Their candor (albeit anonymous) as documented in the December 2010 edition of Corporate Counsel Magazine online should serve as a shot across the bow to those firms that are – as-of-yet – unwilling to buy in to a more modern way of partnering with their clients.

“Virtually all firms are willing to talk about alternative fee arrangements, but few are actually willing to commit,” said one law department leader.

“The firms all seem to think ‘alternative’ means an alternative path to the same high fee,” said another.

“Law firms need to adapt to the new marketplace or lose our business,” concluded a general counsel, in what appears to be a startling ultimatum.

Amid the backdrop of the added pressure on law firms to make alternative billing arrangements with their clients, it’s again important to point out that Burns White has been a pioneer in this type of agreement since our inception, when we immediately entered into such an accord with our largest client. During the last 20-plus years, we’ve initiated various, creatively structured flat fee arrangements and monthly fixed retainer fees with clients that allow for adjustments in their payments on a monthly, semi-annual or annual basis, depending upon what is mutually agreeable between the firm and those we represent.

Surveys and feedback such as those documented above serve to support not just our decision regarding alternative billing arrangements, but also our firm’s overall philosophy regarding client representation: We strive to offer higher levels of productivity and cost efficiency to help you enhance your bottom line.