PANGEA3 LLC

Not surprisingly when the recession hit the legal industry, arguments against the billable hour model resurfaced in numerous articles and blogs. The recession has forced many law firms to not only downsize but, in a bid to show an understanding of the pressures corporate counsel face as well as keep their clients happy, firms are also discounting billable hour rates and providing alternative fee arrangements such as flat-fee pricing. But discounting billable hours doesn’t necessarily equate to cost savings.

In an article by the Boston Business Journal, Christopher Mirabile the president of the Northeast Chapter of the Association of Corporate Counsel and other industry experts, discuss the value of discounting billable hour rates. Interestingly one of the arguments against discounting billable hour rates revolves around value and efficiency. Alternative fees and fixed-fee arrangements place the burden of ensuring efficiency on the law firm or legal services provider whereas the billable hour can potentially promote inefficiency. Essentially, no matter how low the billable rate plummets inefficiencies will cost you in the long run.