I had the privilege of participating as a speaker at the Billable Hour CLE held recently at Seattle University School of Law. As an “outside” counsel, here were some of the most significant things I learned:
1. Clients may find the billable-hour system “frustrating.” Though for complex matters, lawyers and clients have to discover the perfect alternative.
2. For business clients, tension exists between alternative fee arrangements, such as fixed fee or contingent fee, and value received. Clients worry about whether alternative fee arrangements will yield lower-quality services and attorney windfalls.
3. For complex litigation (what I do), budgeting early and often is key. Some businesses require monthly budget updates. Designing realistic budgets and tracking those budgets as close to real-time as possible may be key.
4. In-house counsel have clients who are often more demanding than may be apparent to outside counsel. Outside counsel should recognize that their value is measured in large part by the degree to which they help in-house counsel make their own clients happy.
5. Business clients are very concerned about lawyer-firm staffing inefficiencies. Clients do not want to subsidize excessive salaries for new attorneys (often more than salaries for experienced in-house lawyers). Clients are also concerned that senior lawyers may be billing for tasks more appropriately accomplished by less-senior lawyers.
6. “Experts” in the legal profession expect the harsh economics of 2009 to be the best bet in decades for seeing significant change in the industry and the billable-hour paradigm.