Guru predicts demise of firms using hourly billing

Law firms which refuse to consider alternatives to hourly billing will end up 'dodos', billing guru Richard Reed told a seminar of US lawyers.

Speaking at the ABA convention Reed revealed that 78 per cent of US firms surveyed last year were looking at introducing alternative billing methods. He said: “Firms that are following the old ideas about hourly billing, thinking the recession that brought the alternatives about is a passing phase, will become the dodos of the legal world.”

After the seminar English solicitor Michael Simmons, partner at Finers and a consultant on professional practice, attacked the Law Society for not promoting alternative billing.

“The ABA has published Reed's books and has a whole section devoted to practice management. The Law Society has got nothing.” He also blamed law firms and clients for conservatism: “English lawyers argue that you can't learn anything from Americans, they are colonial and behind the times. In fact nothing could be further from the truth. They are light years ahead.”

Reed revealed that the most popular alternative in the US to hourly billing was the fixed fee. “Incredibly the fixed fee is used most frequently for litigation work. A few years ago when we asked litigation lawyers about fixed fees, they were saying it would be impossible to carry on in business without hourly billing.”

Reed, a management consultant, former chair of Seattle firm Reed McClure and chair of the ABA's law practice management section, is widely respected in the US. He has long criticised hourly billing for the fact that it does not represent the true value of the work a lawyer does. The ABA has just published Billing Innovations, his third book on alternative billing.

Also at the billing seminar legal management consultant Morgan Harris told lawyers about “Alternative Billing that Clients Rush to Pay”.

He said: “Clients' primary concern is that the lawyer is committed to them, and they want to know what he is doing for them. Bills should be “laced with verbs like 'conferred' instead of 'conference' and should say 'determined to do so and so' and 'constructed deed'.

“Reading your bill, clients should feel exhausted by the time they get to the end.”

Reed's book is available for a fee from the ABA. Tel: 001 312 988 5568.