In-house counsel looking for alternatives, says report

By Olivia Collings | ALB Legal Business

According to new research, 63 percent of Australian and New Zealand organisations have used alternative billing for legal services, while nearly one third use it as common practice.

The findings from the 2012 Australian Corporate Lawyers and Corporate Lawyers of New Zealand report indicate that an increasing number of in-house counsel are moving away from hourly billing. Furthermore, 24 percent of organisations are planning to implement alternate billing arrangements, 11 percent contract labour and seven percent legal process outsourcing, as common practices.

While only 28 percent of organisations commonly use alternate billing methods, 43 percent of organisations have at some point used fixed fee per matter or transaction, and 34 percent have at some point used fixed fee for stages of a matter or transaction. Of those organisations that commonly use alternate billing, 93 percent use fixed price billing, 39 percent use volume based billing, 21 percent use risk and reward billing, and 18 percent use value based billing.

According to the report, only four percent of in-house counsels agree that hourly rate is the best approach to billing, while 52 percent believe it is not ideal, however, no alternatives are provided. Twenty percent have stopped considering the matter and 24 percent are dissatisfied with hourly billing. “Given the years of consistent feedback by in-house counsel that alternatives to hourly billing are desired, the market has yet to be able to satisfy this need,” said the report.

Trish Hyde, CEO  of the Australian Corporate Lawyers Association, said there is definitely room for improvement in this area, but that in-house counsel have a role to play in the success of alternative billing methods as well.

However, it’s not all bad news for firms. Of the 346 single survey responses to the survey the majority are satisfied with the work completed by firms. “Of the top providers 34 percent were extremely satisfied and 50 percent satisfied giving an overall positive rating of the primary firm.”