In these troubled economic times, fixed fees for particular legal matters have appeal both for law firms and their corporate clients. We — a former general counsel of a major company and a current co-managing partner of a major firm — strongly believe that this is an idea whose time has come. For in-house counsel facing tremendous budgetary pressures, the fixed fee addresses the problems caused by the hourly rate, such as unpredictability, high costs divorced from actual value and, most importantly, the maddening law firm definition of “productivity” — defined as more lawyers and more hours per matter.
For law firms facing reduced demand and cash-flow problems (if not crises), the fixed fee addresses the issues of increasing overhead devoted to the billing process, clients flyspecking bills and demanding after-the-fact discounts, and delays in payments and falling realization rates.
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