Lawyers Trying Billable Hour Alternatives to Appease Clients

Lawyers make a lot of money, and just maybe, California law firms are part of the problem instead of the solution.

In the '90s, Silicon Valley powerhouse Gunderson Dettmer kicked off the salary shift in the Bay Area by offering new associates $125,000 salaries, which prompted competitors to match the blockbuster salaries. The cost of the salaries was passed along to the consumer as an increase in legal fees, reports Forbes.

Even as various economic bubbles burst, the billable hour rates for legal work remained high. But Forbes suggests that the “legal industry is in the midst of a once-in-a-generation disruption,” and everything’s about to change.

That’s not surprising, given the backlash against exorbitant first-year associate salaries. As clients refuse to pay top-dollar to fund the learning curve for neophyte attorneys, law firms are being forced to consider alternatives. Here are just a few of the ideas that are gaining traction:

• Alternative fee arrangements. Flat fees or contingency fees provide clients with more peace of mind than the billable hour. The downside for lawyers is the possibility of lots of work with little-to-no reward.
• Practical skills mandates. Similar to the medical profession’s residency requirement, the California Bar is considering a proposal to implement a residency requirement for lawyers.
• Lean, mean legal machines. Some firms are catering to corporate clients that demand lower rates by cutting costs and increasing efficiency. Budget-friendly billables, however, are a relative concept. Forbes notes that these firms can still charge up to $400. It’s not cheap, it’s just cheap by comparison.

Would you consider any of these revenue-reducing measures to keep the clients coming?

Related Resources:

• How Much do Lawyers Make: CA Lawyer Salaries Highest in US (FindLaw’s California Case Law Blog)
• West Coast Law Firms Raising Associate Salaries (FindLaw’s Greedy Associates)
• Firm’s Legal Tab: $43 Million, $50K to Prepare Legal Bill (FindLaw’s Strategist)