Half of corporate lawyers favor the fixed-fee billing model over other billing methods, according to Legal Week's recent Client Satisfaction Report. Just 11 percent of the 1,204 firms surveyed said they preferred hourly billing, while one-quarter favored capped hourly rates. The cross-section of responses illustrates the idea that for many within the sector, attitudes about client billing are undergoing a metamorphosis—a notion that has been underscored by increased legal billing software
adoption rates. Like the fixed-fee approach, legal billing technology
integration offers the opportunity for firms to realize greater efficiency.
"We are certainly seeing greater innovation and willingness to discuss and structure fee arrangements from our relationship law firms," noted Joanna Talbot
, head of dispute resolution at BAE Systems, as quoted by the news source.
This is reflected by the fact that the fixed-fee model has been adopted by numerous new market entrants. That said, the practice of setting up billing on a fixed-fee basis is by no means restricted to up-and-comers within the sector, as many large and more established firms have been using the model as well, the media outlet notes.Why choose the fixed-fee framework?
Fixed fees provide certainty for clients, an aspect that's missing from the hourly billing method. In general, clients take comfort in their legal expenses being practically set in stone—particularly in a down economy—as this predictability allows them to make informed budgeting decisions and mitigates the likelihood of costs spiraling out of control.
"Fixed fees also can help assure clients, who may perceive a disparity between their costs and the value they receive in exchange, that they're getting the services they're paying for," added
certified public accounting and business consultancy Feeley & Driscoll.
Provided they effectively set their fixed fees so as not to short-change themselves or their clients, law firms can also reap significant benefits from the fixed-fee billing model. These include improved efficiency, more streamlined delegation of duties and a potential competitive advantage over others in the field who use hourly billing. Like their clients, law firms also tend to appreciate the predictability offered by the model.