Chase Bryan recently blogged about the billable hour system and alternative fee arrangements. A barrier to alternative fee arrangements is in-house lawyers who are afraid of change:
…a former outside lawyer and now a general counsel at a large company, expressed skepticism about alternative fee agreements. He said that everyone talks about alternative fees deals but folks rarely actually agree to engage in them. He relies on the default of hourly fee arrangements because it is familiar.
That’s consistent with my experience. I’ve proposed flat fees to corporate clients who weren’t comfortable with the concept because they had never done it before.
Corporate America is largely built on the backs of employees who do not want to rock the boat. Changing the way your outside attorneys bill would rock the boat–so companies usually maintain the status quo.
The legal industry is slow to change. I suspect that alternative billing will continue to grow, but at an extremely slow rate. Perhaps one day there will be a tipping point that speeds it up.
Another great defense-side idea that has been slow to adopt is resolution counsel who are separate from litigation counsel. I’ve seen this concept used a few times and am impressed with it. Having resolution counsel whose sole job is to try to settle the case eliminates the inherent tension between a defense lawyer’s need for work and the benefit of settlement for clients.
It’s a topic for its own post, but the concept of resolution counsel makes more sense than ever. The value of cases has dropped so much over the last 10-15 years that the exposure levels usually do not justify spending six figures to defend cases.
That made sense back when many cases settled in seven figures. Who cared if defense counsel billed $250,000 if they beat the settlement value down from $2 million to $1 million? That’s how it worked in the litigation boom.
Not so much today when those same can be resolved in the low to mid six figures. Perhaps I’ll post more of my thoughts on this topic later.