Posted on 07/05/2008 2:28:34 PM PDT by buccaneer81
Lawyers might be going off the clock Saturday, July 5, 2008 3:00 AM By Braden Lammers THE COLUMBUS DISPATCH With money tight, we all want to know exactly what we are paying for.
That applies to professional services as well as grocery-store staples.
As a result, there is a change brewing in the legal arena on the best way to charge clients. One Columbus law firm has abandoned the long-established standard, the billable hour.
Waite, Schneider, Bayless & Chesley moved to a fixed rate, or an alternative fee as it is called, in January.
"Lawyers call it alternative billing because they think it's something that happens in the accounting department," said Carl Leonard, senior consultant for Hildebrandt International, a professional-services consultancy.
The alternative fee is a single-rate-charge for the client. For Waite, Schneider, Bayless & Chesley, the fee is something that the attorney discusses with the client on a case-by-case basis and is evaluated during each phase of the case.
For the clients of the firm, which specializes in securities litigation, business litigation and antitrust cases, the benefit is being able to budget.
"With business getting squeezed by the economy, anyone that has to have an attorney complains about legal fees," said D. Michael Grodhaus, a partner in Waite, Schneider's Columbus office. "I think what they are complaining about is the unpredictability of the cost."
The 19 attorneys in the Columbus office have responded well to the fixed rates, he said.
The clients who are choosing the alternative fee are departing from a billing system that has been the standard for nearly half a century.
"The billable hour is just a terrible way for attorneys to bill their client," Grodhaus said, citing a 2002 American Bar Association study. "It doesn't give the client any certainty, and it doesn't give the attorney any incentive to expedite the process," he said.
The billable hour became popular because of the growth of law firms, the breadth of their clients and the ease at which the billable hour can be applied, said Anastasia Kelly, executive vice president and general counsel for American International Group Inc. She was co-leader of the American Bar Association committee that studied the issue.
"The billable hour very rarely represents the value of the work (and) it can be easily abused," Kelly said.
The study also contended that billable hours penalize efficient and productive lawyers, discourages communication between the client and the lawyer, and puts the client's and lawyer's interests in conflict.
Even attorneys hate the system. It turns their work into something that is measured in 15-minute increments, Kelly said.
However, the alternative fee is not without its problems.
The flip side to alternative billing is that the client might end up paying more than under the billable-hour system, said Russ Gertmenian, presiding partner at Columbus-based law firm Vorys, Sater, Seymour and Pease.
For a large firm like Vorys, it is very difficult to initiate an alternative fee arrangement for all of its clients. The firm, with about 230 attorneys in its Columbus office, uses a variety of billing options, including alternative fees.
"We really believe there is no 'one-size-fits-all' for billing clients," Gertmenian said. "We are really totally flexible on billing arrangements."
For the attorney, the alternative fee requires a negotiation process with each client and a predetermined idea on how to approach each case.
"You have to figure out exactly what you're trying to do to be able to charge (the client)," Kelly said.
Despite the security that the flat, alternative fee offers, it's not always what the client chooses.
"Most of the clients that request for alternative billing options are still opting for the hourly rate," Gertmenian said. "They're most comfortable with it."
When the concept of alternative billing is introduced to a company's in-house lawyer, the most common purchaser of legal services, they get very uncomfortable, Leonard said.
"When I was dealing with a business guy (and introduced alternative fees), he loved it," Leonard said. "But when they introduced the lawyer, he put the kibosh on it."
Still, almost every firm Leonard has spoken with reports that they generate 95 percent of their revenue from the billable hour.
The most important thing to come out of alternative fee arrangements is the client and attorney working together to determine a charge, said Silvia Coulter, vice president and chairwoman of client development and growth practice for Hildebrandt International.
Even though alternative fees are gaining momentum, they still are not the standard with most law firms.
"The billable hour is still king," Kelly said. "As systems become more sophisticated I think we'll see (alternative fees) used more."
blammers@dispatch.com
Be grateful.
/johnny
You lucked out! Mine cost me a fortune. Motly due to an uncooperative soon to be ex-husband, a huge custody battle, unpaid child support, garnishing of his wages, a knocked-up girlfriend who resented my children and the final step of his signing away his parental rights and allowing my new husband to adopt them.
That's what I was expecting at the time. But I was lucky to find my lawyer through a friend. My lawyer was getting ready to retire at 60 and really didn't need loads of money (so he said.) He usually took cases by word of mouth and he didn't nickel and dime me. He practiced solo the last 20 years of his career and said it was more trouble for him to watch the clock every 15 minutes than it was worth.
What a sweetheart of a guy. You and the kids really are better off.
I always found it hard to mediate between two when the husband made the fatal mistake of saying he did not want to be bothered with having the kids hanging like a log chain around his neck.
My first thought was possibly stringing this sorry bastardo up by the testicles until common sense soon came into sight.
In the 70’s we farmed out insurance company lawsuits to different lawyers as we had no in-house representation.
My uncomplicated, one court appearance using one of these lawyers cost me a bottle of scotch.
Monty Hall couldn’t have made a better deal. :-)
Now those were the days.
You sound a little bitter.
Only that he fought so long only to drop the kids when push came to shove. Believe me - the kids are far better off without him. =)
the ground has been plowed before many times by some of the nation’s leading law firms. all that changes with a shift from hours to transaction-based billing is that instead of “work more, slaves!” the partners want their associates to “work faster, slaves!” as well.
Kids are rarely better off by losing one of their parents. It does them serious, long term emotional damage. :(
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