Clients are increasingly frustrated with shortcomings of the hourly rate system. One of their major complaints with hourly billing is that it provides no incentive for attorneys to be efficient. Rather, there is an incentive to be inefficient. The more hours worked, the higher are the fees and revenue for the firm. This translates into higher personal incomes for attorneys who record and bill more hours and collect higher fees.
Also, billing on an hourly basis provides for clients little or no predictability about their cost for legal services. Fees charged may bear little if any relationship to the results achieved or to the value of the legal services to the client. Further, with hourly billing, the client assumes the total risk for unexpected and unanticipated events or undesirable results. As the result of the highly competitive environment in which most firms operate, the clients’ desire to contain costs and the leverage which they have when selecting outside counsel, an increasing number of clients are encouraging, alternative billing arrangements as opposed to the traditional hourly billing system.
Alternative Billing Arrangements
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