In-house lawyers are increasingly uncomfortable with hourly charges and want firms to offer them alternative methods of legal billing, according to new research published today (26 September).

Eighty-two percent of respondents to a survey by the C&I Group and accounting firm BDO Stoy Hayward said hourly billing provides no incentive for advisers to be efficient.

Almost three-quarters (74%) of the 171 leading in-house lawyers polled said hourly rates encouraged 'padding' of bills, while 43% felt they were subsidising the high salaries paid to law firms' junior staff.

While hourly billing is the most commonly used method of charging – with 97% of in-house counsel having been billed on an hourly basis in the last 12 months – the practice rated lowest in terms of the satisfaction it provides corporate counsel.

Respondents favoured a 'menu' approach allowing in-house legal chiefs to select the most appropriate method of billing for each specific instruction.

The C&I Group now plans to work with firms to devise a 'tool kit' to deal with billing issues.

C&I Group London chair Deepak Malhotra commented: "If in-house counsel and law firms are to explore a new approach to billing, it has to be within a climate of trust. There is no 'one size fits all' approach to buying legal services."

Cisco legal director Richard Given said firms should take into account the changing needs of their customers and change their attitudes to billing, adding: "Firms will be successful because of their customers, not despite them."

Corporate Counsel Q&A: What is the perfect panel?

Read Deepak Malhotra's blog on Legal Village