When we conducted our annual outside counsel survey last year, there was talk of revolution in the air. The recession was forcing corporate law departments to cut their budgets wherever they could, and outside legal spending was the biggest target. But some in-house lawyers told us that they weren’t just trying to get steeper discounts from their law firms—they wanted a fundamental change in the way they were charged. They were fed up with invoices based on the billable hour, and were pushing firms to switch to alternative fee arrangements. Surprisingly, the outside lawyers that we talked to said that they were okay with this, and were doing what they could to meet the demand.
A year later, we decided to check: Has the Bastille of the billable hour been torn down? Well, not yet. According to both inside and outside lawyers whom we interviewed for our latest survey of Who Represents America’s Biggest Companies, most invoices are still based on the hour. But, everyone agrees, alternative fee arrangements have become more common. And, they add, these agreements are leading to an unexpectedly positive side effect: better relationships between law departments and law firms.
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