You can make a strong case to support the assertion of Peter Kurer, UBS' general counsel, that the legal services market is "dysfunctional". Kurer argued in a recent Legal Week debate that surging profits at leading firms were largely the result of rising legal bills and proof that the market for law just isn't working properly. His comments are timely, coming so soon after the Commerce & Industry Group's recent report on fees once again illustrated simmering client anger over costs. With partner profits having more than doubled over the last decade, it does seem evident that something is not right with the market.

Yet it seems hard to fathom why general counsel believe the primary fault lies with advisers. Ultimately, the responsibility to assert purchasing power is the client's. Legal advisers, much like any other service provider, will charge what the market will bear, no more. So the fact that fee inflation has soared during the period in which the panel system has gained currency raises awkward questions for clients.

Some reply that they are 'forced' to instruct a small band of firms, especially for premium work. But if a broader spectrum of firms can handle the work then it is the duty of clients to spread that work around more widely, which would impact swiftly on fee levels. The rarely-articulated reality is that general counsel will sometimes instruct certain 'brand' firms for the insurance factor should anything go wrong. And insurance does tend to cost more than we like paying.

Leaving supply-and-demand aside, many target the hourly rate. As there is substantial incentive to be inefficient in any time-based charging, this is understandable, but it is surely, to a considerable extent, the job of in-house teams to manage this tension.

It is also a mistake to think City lawyers are opposed to value-based billing. The hourly model forces firms to churn out massive hours to be profitable rather than basing their services on strategic nous. General counsel should be aware that value-based billing in a transactional environment would probably put booster rockets on fees for high-end work judging by the experiences of the Manhattan firms that have used such models, though mid-market fees would likely slump. Perhaps that is the way the market should develop; perhaps a mature discussion between client and counsel will develop better ideas. Either way, the lead must come from clients.