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The billable hour model is not going anywhere anytime soon in the legal industry. However, more law firms are embracing alternative fee arrangements in order to stay competitive.
William Howard, a shareholder with Baker Donelson in New Orleans and Baton Rouge, said the firm began investing in more resources towards AFAs around five years ago after seeing a marked increase in interest from clients.
"The demand was driven largely by clients who wanted more certainty in their legal budgeting," Howard said. "A successful (AFA) begins with a mutually understood scope of work and how much risk each side wants to tolerate. Some significant clients won't do work any other way."
AFAs, which include blended rates, fixed fees, capped fees, and contingency fees, have been used by many law firms for decades.
They are different from the more traditional billable hour model, where attorneys charge and counsel by the hour.
A recent survey conducted by Altman and Weil, a management and consulting services firm, showed that over 48 percent of the 304 U.S. law firms surveyed increased their amount of non-hourly based billing...