Law Firm Billing: A Paradigm Shift

bomb suitcaseMy brother, Will, works for a large law firm in Oklahoma City. Today he is on his way to Mumbai, India in search of law partners. Why Mumbai? The work product is first rate and the cost is cheaper- much cheaper. The old way of building a practice and a law firm is over. There are more lawyers graduating from law school and not finding work than ever before.

What happened? Clients got smarter. They watch (and audit) the bills much closer than ever before. They are interested in results. They do not want law firms that throw $150 per hour associates at a matter without adding any value to the file. There is so much waste in law firm billing because the firms have such large overhead to cover-including associates’ salaries. 

Some large companies still only feel comfortable hiring the legal behemoths. These companies are, like their law firms, a modern day anachronism.

Smarter, leaner clients will hire firms that outsource. They will also hire firms that will take cases on a contingency fee or on a hybrid fee. They will ask for value billing. This may mean that a lawyer will charge a different hourly rate for things like depositions than for things like simply reviewing documents. Some lawyers will bill at a lower rate, and have a success fee that will be paid depending on results.

If you are in charge of hiring a law firm, be smart. Have a clear understanding of what you hope to achieve through your litigation. Find out whether your goals are attainable through litigation.

Then shop around. Interview several firms. Give input. Make it a collaborative effort. So many companies hire firms and turn the entire matter over to the law firm to handle.  That is an invitation to a gouging.


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