Survey reveals dissatisfaction of hourly billing with in-housers

In-house lawyers have hailed the C&I Group/BDO Stoy Hayward survey on law firm billing as a positive development in the ongoing debate on external counsel fees.

As first reported on www.thelawyer.com (26 September), the survey revealed that 97 per cent of in-house lawyers pay their firms using the hourly billing method, with 94 per cent stating that there was no certainty over the final cost.

In welcoming the findings, in-housers point to the research drawing attention to the disillusionment felt by the in-house community.

“I’ve long held the view that the classic billing method used by law firms is uncommercial, not client-friendly, anachronistic and self-serving in that it rewards inefficiency,” says PartyGaming general counsel Andrew Fritchie. “It’s high time we called on it.”

Honda UK company solicitor Daniela Baker, who uses fixed-rate billing in the bulk of her external appointments, agrees. “The survey’s definitely a step in the right direction,” she says.

That said, Pegasystems director of legal for the Europe, Middle East and Africa and Asia-Pacific regions Nils Breidenstein says the survey was only the start of a “possibly painful” process.

Many support his view and are keen to work towards what Katherine Britten, partner and head of forensic accounting at BDO, calls a “no-surprise” billing culture.

Meanwhile, the survey has also sparked a response from the private practice sector.

“We’ve now had law firms ask us to present our findings to them,” says Britten, who led the initiative alongside C&I Group London chair Deepak Malhotra. “We also want to stimulate dialogues between law firms: firms can learn from other professionals.”

Britten adds that BDO, as an accounting firm, uses combined billing methods, such as a fixed-fee for the initial stage of a project followed by an hourly fee for the latter stages.

Malhotra says law firms will be working hand-in-hand with in-house lawyers to create a toolkit to enable in-housers to better utilise alternative methods of billing.

“The toolkit will essentially be a practical and user-friendly document that both private practice lawyers and in-house lawyers can use themselves,” he explains.

The kit, which is slated for release in early 2008, would include information explaining the various billing methods, with examples and lists of advantages and shortcomings of each form of billing as well as case studies.