Will The Bad Economy Move Clients Toward Alternative Fees?

There have been a few articles written recently speculating that the deteriorating economy will force a shift from billing by the hour to alternative fee arrangements. This recent article in the Washington Post (quoting Boston alternative fee pioneer Jay Shepherd) described in-house counsel as "frustrated" with soaring legal bills from firms that still bill by the hour and that clients wanted more "certainty in their legal budgets." And the most recent issue of the National Law Journal featured this article by reporter Julie Kay which made the point that in this "sour" economy, law firms are going to have to be more "creative" in their approaches to setting fees.

But these articles again beg the question -- from which side of the lawyer-client relationship is this push for alternative fees going to come?

I've posted on this issue before. Certainly, as both articles note, I would not be surprised if there is some movement in the corporate world to start demanding alternatives to billing by the hour. But in the long run, I've come to agree with value pricing guru Ron Baker that the big push will have to come from our side -- the law firms (Ron tactfully noted in his blog that while I was originally skeptical of that notion, I have come to agree with him).

As these recent articles suggest, and as noted by Chicago alternative fee pioneer Patrick Lamb, in the current economic situation law firms only billing by the hour would be wise to reassess their business model. But I suspect many won't. Perhaps it will take the success of Jay's firm, Patrick's firm and my firm to begin to persuade more firms to move to alternative fees.