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More companies move away from billable hours
Posted by Karen1 in outside counsel, billable hours, American Bar Association
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Over the past few, turbulent years, all areas of spending at most companies have come under the gun. That includes the moneys spent on outside attorneys. In-house law departments, along with the financial folk who saw the bills, questioned ever-increasing hourly rates. In addition, many corporate clients couldn't help but question whether an hourly billing model provides some attorneys with an incentive to pad their hours or work less efficiently than they otherwise might.
The result? A small but growing number of companies are moving to payment arrangements other than billable hours. Nearly two-fifths of respondents to a 2009 survey by the Association of Corporate Counsel and The American Lawyer said that their use of alternative billing had increased. Granted, the alternatives still were used sparingly - no more than 10 percent of the annual totals spent on outside legal fees at about half the respondents - but the trend is clear. "The move to fees based on something other than billable hours is steady, if still small," Aric Press, editor in chief at The American Lawyer, said in a release.