Fixed Fees At Last?
Lawyers have discussed alternative fee arrangements (AFA) since at least 1989, when I first became a law firm manager. The economic crisis adds fuel to the supposed AFA fire. Now, a new article by two prominent lawyers argues the merits of fixed fees, pointing out what it will take to get there.
Two Veteran Lawyers Say Now Is the Time for Fixed Fees (Corporate Counsel, 24 Aug 2009), by Ben W. Heineman Jr. and William F. Lee (respectively, former General Electric Co. SVP & general counsel, now distinguished senior fellow at Harvard Law School’s Program on the Legal Profession and co-managing partner of Wilmer Cutler Pickering Hale and Dorr), sets forth in detail the benefits of fixed fee billing to BigLaw and clients.
If nothing else, the article is interesting because of the prominence of its authors. Beyond that, it lays out different matter types and suggests fixed fee approaches for each. Further, it suggests specifics such as “data-mining techniques to determine reasonable ranges of cost for a wide variety of legal services” and project management. The authors’ comments on PM are especially interesting, not just because they say the words ‘project management’ but also for what they lump in with it:
“Law firms must develop project management capacity that combines sensitivity to quality with sensitivity to productivity. The time invested in a project will be managed as the project proceeds, rather than discussed after the fact… [client and firm must] learn to do more with less: the real definition of productivity. By the same token, in-house law departments must also develop project management capacity (and productivity measures for in-house lawyers).. For both in-house and outside lawyers, connective technology (e.g., general and specific deal documents, databases, or general and specific litigation documents) and selective outsourcing to third parties can help drive real productivity.” (emphasis added)
If the quoted text became reality, that would indeed be big. Almost every time I talk to partners about project management (or budgets for that matter), their eyes glaze over. Likewise, partner attention span for technology rarely exceeds a few seconds. And many BigLaw partners have gone on record about the putative horrors of outsourcing.
So, from my perspective, it’s great to see two prominent lawyers argue implicitly or explicitly for what I’ve advocated at this blog since 2003: technology for law practice productivity, business intelligence for both law firms and law departments, knowledge management (KM), a focus on the process of how to practice law, use of decision trees for risk analysis, risk-based decisions about how much to invest, and legal and middle office outsourcing.
I hope the authors will back their views with action, putting their considerable personal influence and their organizations’ resources behind their views. Many a legal market foot soldier or low-ranking officer have tried to go down the road they suggest, only to end up lying wounded on the side of the road. We now need the generals to lead. And the battle metaphor is intentional: changing how lawyers think and act will be hard indeed.
Update (24 Aug 2009): The Wall Street Journal today published ‘Billable Hour’ Under Attack, about fixed fees and AFA.
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