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Whether to request time records even when the law firm has agreed to handle matters on a fixed fee

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For years I have urged law departments that negotiate fixed fees with a firm to insist on monthly bills nevertheless. The law department wants to be able to review staffing, the order of tasks undertaken, levels and composition of lawyers assigned, and other intelligence from invoices. Furthermore, when it comes time to renew the set-fee agreement or perhaps to choose another firm, the basic data of tasks, hours and staff provides a backbone of understanding. It is much easier to describe the potential workload when you have historical data.

A speaker on a recent panel jolted my self-satisfied belief. He said “If we still ask for hours, we’re still in that domain – drop hours and focus on value.” In other words, if you make the decision that a certain fee for certain work delivers appropriate value, then abandon the Tayloristic approach of time records and minutiae. Value is value, not hours.

A good point, but not good enough. You need to have a grasp on what was done and by whom so that you can review and report on activities accomplished and so that you can extend such an arrangement based on credible descriptive metrics.

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One response to “Whether to request time records even when the law firm has agreed to handle matters on a fixed fee”

  1. Steve French says:
    May 26, 2011 at 1:36 pm

    In the history of Legalbill we have never seen a fixed fee proposal that was substantiated to be in the best interest of the client after requiring the firm to attach time entries or “shadow billing”. There is a simple explanation for this. When the client asks the firm to fix its fee it has transferred the financial management risk from the client to the firm, requiring the firm to build into its fee the potential for numerous risks or unexpected occurrences. The hourly fee, while troublesome for the client, puts all the risk at the clients end since the firm is simply invoicing for actual time regardless the unexpected or extraordinary. The only possible way to determine cost effective and mutually beneficial fixed fee arrangements requires both parties to be in sync on actual costs of the services and agree on a margin of profit that equates to high for the client and too little for the firm.