The Lawyer’s new China Elite report contains the most detailed research available on the PRC legal market and contains unparalleled insight into the country's leading law firms. They vary in size, practice focus and geographic coverage, but they all share one common quality – ambition... Read more
This year, The Lawyer’s annual ranking of the largest UK law firms by turnover is available as an interactive, digital benchmarking tool. For the first time this will allow you to manipulate each data set against the metrics of your choice.
Hourly rates a thing of the past as elite firm joins the rank and file and offers clients ‘value billing’
Slaughter and May has modified its billing practices to embrace discounts and fixed fees, as in-house lawyers hike the pressure to abandon hourly rates.
The firm now mainly uses ‘value billing’, whereby an estimate is agreed on based on “realistic assumptions”, according to a partner.
Slaughters executive partner Graham White said the firm had always offered alternatives to billable hours, but admitted that the use of fixed fees had increased in recent months.
“We’ve just responded to what clients have asked us for,” he said. “The model of many City firms was, for a long time, to agree fixed hourly rates. I think in-house counsel have realised over the last couple of years that it’s not necessarily the most efficient model.”
Slaughters has also adopted a new approach to discounting, for example by offering lower rates for deals that fail to complete.
The general counsel of one Slaughters client said: “Historically they were unwilling to discount their fees or enter into risk-sharing arrangements. They would appear to have modified their approach.”
Slaughters has always shunned the hourly rate, preferring to bill based on the ‘value’ of its services, but agreeing fees in advance is a new phenomenon. In October 2008 the firm won a place on ITV’s fixed fee-only panel, the first to be made up of firms that do not charge by the hour.
Hourly rates have long been a source of frustration for in-house lawyers, who complain that the costs can spiral out of control. One senior in-house lawyer said: “It’s not as easy as it sounds, but I think it’s still possible to use fixed fees for almost every piece of work.”
Berwin Leighton Paisner has followed Slaughters in reviewing its fee structure and is now offering clients a ‘menu’ of pricing options, including fixed fees and risk-sharing, under which rates are determined by the success of a transaction.
Managing partner Neville Eisenberg said: “There’s an increasing interest in aligning our pricing structures with the risk profile of deals.
“It’s traditionally been useful on transactional work, where at early stages it’s not always clear that it will close. But it’s something we’ve been extending out more broadly and being more proactive about.”
Additional reporting by Luke McLeod-Roberts.
To receive our free Lawyer News Daily news and comment email, click here. Or get the latest news, features and comment as it's published with our free RSS feed.