Half of all corporates prefer fixed fees when it comes to law firm billing, according to a Legal Week study of client satisfaction among in-house lawyers.

Legal Week Intelligence's Client Satisfaction Report, which surveyed 1,204 companies, found 50% favouring fixed fees, with 11% of respondents preferring hourly billing to other methods, while a quarter said they prefer capped hourly rates.

The report also found that clients' overall satisfaction with cost and billing practices has increased in recent years, with happiness with billing practices rising to a new high this year, against a significant fall in annual legal spend in corporate departments.

"We are certainly seeing greater innovation and willingness to discuss and structure fee arrangements from our relationship law firms," said BAE Systems dispute resolution head Joanna Talbot.

"An appreciation that the hourly rate charging model often doesn't sit with the business requirements for costs certainty and clarity of forecasting is much more widespread."

A number of new market entrants have embraced the fixed-fee model, including the DLA Piper-backed Riverview Law, while examples of large firms securing work on a fixed-fee basis include Baker & McKenzie's deal to handle German software company SAP's global trademark portfolio, and Eversheds' much-touted Tyco relationship.

Eversheds global client development head Stephen Hopkins commented: "Most GCs do not want cheap; they want quality and efficiency, but most of all they want certainty. The GC does not want to have to go back to the financial director at the end of the year and – a bit like Oliver Twist – ask for more."

Click here for profiles of the top-rated firms in this year's Client Satisfaction Report, and for more information, contact Paul Birk on 0207 316 9864 or [email protected].