Recent research has found that “lawyer compensation and client billing practices are inextricably connected.” This quote from a brief summary of a paper presented by Huseyin Leblebici (Univ. of Illinois, Champaign Urbana) at a 2003 conference run by the Clifford Chance Centre for the Management of Professional Services Firms (Said Business School, Oxford – www.sbs.ox.ac.uk), points us to a little discussed tactic.
If you want to change the billing culture of one of your law firms, you must grapple with the way the firm compensates its partners and associates. I have not heard of a law department that peered this far into the bowels of billing (although I know of a pharmaceutical company that toyed with limiting the profit margin of its primary law firms), but the quest makes sense. If, for example, the distribution of a partner depends mostly on individual fees collected, a law department stands little chance of setting up fixed fee arrangements with that partner, for the reason that they emphasize profitability, not profligacy.