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To tackle law firm billing, grasp the firm’s compensation system

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 –, 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.