Legal Week research highlights the efforts UK firms are making to offer more creative billing arrangements

If the general message from hard-pressed clients is that they are expecting real ground on costs this year from advisers, research from Legal Week suggests that the message is getting through to private practice.

General information on billing policies from the UK's 10 largest law firms by revenue, reveals that at least half of the group have put in effect blanket freezes in charge-out rates this year with DLA Piper, Herbert Smith, Eversheds and Ashurst all confirming they have put benchmark rates on hold.

Lovells is also expecting to make a similar move at the conclusion of a review of billing, while Allen & Overy had already indicated it was freezing rates when it unveiled its sweeping restructuring in February.

In addition, the responding firms gave details of alternative billing arrangements that they have in place. Despite the group all already having some form of established alternative billing procedures, there is a consensus that such policies are being used more substantively as clients battle to keep down legal costs.

Understandably, there is no standard policy on billing from firms or a common agreement on how to implement alternative billing with firms implementing a range of responses.

Eversheds, for example, has built its policy across the Global Account Management system that it developed with Tyco, which is based around giving clients more quantifiable information on costs and delivering more predictable expenses.

Kevin Doolan, head of client services at Eversheds, gives a clear message about how the firm is approaching its pricing strategy in the middle of a recession: "I do not see anyone increasing rates in the current climate. It would be wholly inappropriate. We have to show that we are on the same side as the client and that we can help them to manage and reduce their legal costs."

Linklaters operates a different approach. Although the firm does not have a rigid charging structure, it has a wide array of billing policies either to share risk or contain costs. And in addition to its alternative fee policies, Linklaters also provides some clients with value-added services for free.

Richard Godden, global head of client services, describes the firm's approach: "We take each client on a case-by-case basis, it is a question of balancing risk and reward for us and our clients. They are always looking for value for money, and there are many different ways of achieving this."

This approach has been echoed by Slaughter and May, a firm that has been explicit about its willingness to embrace alternatives to straight hourly billing. Indeed, this stance was highlighted when Slaughters was appointed to ITV's legal panel last year, with the broadcaster pushing for all advisers to embrace value-based billing.

And even with the firms that were less forthcoming with details regarding how they are responding to the worst downturn in 25 years, it is clear that they are approaching discussions with clients in a different light.

Ted Burke, Freshfields Bruckhaus Deringer chief executive, sums up the mood: "There has been a lot of talk recently about alternative billing models. I do not think the billable hour is dead but the combination of the severity of the downturn and technological innovation might lead to some significant changes. It is entirely possible to look beyond the billable hour and find an alternative arrangement that works for both the client and the law firm."

This greater focus on value will doubtless be welcomed by clients. Aside from ITV's well-publicised break from the hourly-rates model there has been a particular push from the banking community to striker a harder bargain on fees. Recent examples have seen Barclays and Royal Bank of Scotland press for alternative billing for litigation advisers.

AOL general counsel Tony Wales comments: "Every general counsel has an obligation to minimise outside costs and maximise value, so if outside counsel can offer flexible ways of billing, then all the better for us."

Eversheds' Doolan adds: "Everything needs to be much more results-based. There are lots of different ways to do legal work and we need to understand where we add most value and what bits can be cut out, delegated down or outsourced in another way."

Wales comments: "Recently there has been less of a focus on hourly rates as firms have become more concerned about maintaining a flow of business and they have been more prepared to talk about taking a share of the risk."

The change in approach from law firms has left some in-house counsel wondering what will happen when the markets return and need for mutually beneficial arrangements are less of a priority.

But one general counsel muses: "[Law firms] will find that it does not hurt too much to have these measures in place in the long run and they will stick to them."