Stephen Harper is one the great commentators on the legal profession and BigLaw in particular. He should know, having been a partner with Kirkland & Ellis LLP for 30 years. He recently wrote an op-ed on law firm fees and the billable hour in The New York Times. The topic and the publication should make every lawyer in BigLaw firms sit up and think.
Millions of words have been written in lawyers' trade press about the basis of charging for legal services from both the private practice and client law department sides. Most of what's written is based on the quite legitimate opinions of the authors who generally represent one of two parties. One view holds the supply side (i.e. law firms) should learn to estimate and effectively manage resource allocation (so-called LPM) and thereby provide fixed fee quotes from which the firm can make a fair profit. The opposing view (seemingly held by increasingly fewer voices) claims clients understand and favour the simplicity of the billable hour; and as a consequence honorable firms should continue to charge this way.
Who is right? Neither in my opinion. And my reason is not a cute "It depends..." contingent argument.
The correct answer is a basis of charging that creates value for clients and delivers a fair profit to the firm.
To know what clients value requires a deep understanding of the construct of value–as clients perceive value and law firm fees. Until now to gain access to the deep insights we have into clients' perceptions of law firm fees and the factors that determine whether a client believes they have received fair value, has meant subscribing to a Beaton Benchmarks report on your firm and/or attending one of our First Movers seminars.
The questions, debate and rancour about law firm fees won't go away until private practice lawyers and their clients develop a lingua franca that enables shared understanding of the price in their transactions and relationships.
Recently Beaton has started publishing analyses of our proprietary research and we will soon be releasing a series of instructive subscription videos on the subject. Use the RSS button to keep up-to-date with this part of our Research. Reveal. blog and be amongst the first to gain access to this new resource.
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