Do law firms, busy and profitable, stand strong and reject alternative billing arrangements?

An article in the Legal Intelligencer, Sept. 27, 2006 (by Gina Passarella) touches on the over-worked theme that as to alternatives to full hourly rates there is infrequent action and much “lip service.” A consultant offers an explanation: “One of the main reasons alternative fee arrangements aren’t being used comprehensively is that law firms are doing well financially and are in good bargaining positions.” Let me pick on that point.

True, a partner who brings to the firm an opportunity to serve a client on some non-traditional economic basis might have to get approval from an executive committee or new-matter committee. Generally, however, new work is hard to come by and the decision whether to take on the matter rests with the responsible partner. A law firm as a whole may be booming, but an individual partner at that firm is looking out for his or her own origination and billing numbers. Although some partners are swamped with work, most partners are eager to be retained by a new client and they do not put up stiff opposition during fee negotiations.

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