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Jim Hassett of LegalBizDev Discusses Alternative Billing Trends at the AmLaw 100

By now, virtually every lawyer has heard of the term "alternative billing." But did you know that alternative billing has become an irreversible trend among the largest law firms, including many of the AmLaw 100 firms? Jim Hassett of LegalBizDev.com just completed a survey of 37 of the AmLaw 100 firms regarding alternative billing.  You may be surprised at the results....

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Survey_cover_small"In the long run, the use of alternative fees will grow only if arrangements can be structured in a sustainable way that makes business sense for both sides.  This book analyzes a variety of opinions about what works for alternative fees, and what does not, based on interviews with senior decision makers from 37 AmLaw 100 firms."  

For more information on the LegalBizDev Survey of Alternative Fees, or to purchase a copy, visit their web page.

Want more information about alternative billing?  Check out Jim's alternative billing posts here.

Damien Allen:  Good afternoon, and welcome to GAL Radio.  My name is Damien Allen, and today on the phone we have with us Mr. Jim Hassett.  Jim Hassett founded LegalBizDev.com to help lawyers develop new business by applying the best business practices from other law firms and other professions.  The company specializes in business development and coaching workshops for large and mid-sized law firms.  Before working with lawyers, Jim had 20 years of experience as a sales trainer and consultant to large and small firms, including American Express, The Bank of New York, The Bank of America, TD Waterhouse, State Street, TIA, Kraft, Telamon Insurance and many others.  He received his Ph.D. from Harvard University and is Adjunct Associate Professor of Psychology at Boston University.  Jim is also a frequent speaker at national and regional conferences and has written seven books and more than 70 articles and publications ranging from The New York Times Magazine to Law Firm, Inc.  Good afternoon, and welcome to the program, Jim.


Jim  Hassett:  Thank you very much for inviting me.

Damien Allen:  It’s a pleasure to have you, sir.  Today we’re going to be talking about alternative billing, and you’ve been done some research and some surveys on alternative billing.  If I could get you real quick, sir, could you explain alternative billing to the listening audience, please.

Jim Hassett:  You know, people use the term in different ways.  When I say alternative billing, I mean something that has a non-hourly component.  It could be a fixed fee.  It could be a contingent fee.  It could be a hybrid.  It could be a cap on an hourly fee, but it has some sort of element that is not straight hourly.  Now, I have to say, not everybody uses the term that way.  The way I’m using it is kind of the classic definition, the narrow definition, but there are people who when the say alternative fee also include a variety of blended rates and discount rates, which are strictly hourly.

Damien Allen:  Now you’ve just done some research on this and done some polling.  Could you tell us a little bit about the research that you did concerning alternative billing and the interviews of 37 AmLaw 100 firms.

Jim Hassett:  I’ve been researching this topic for a while, and one of the things I found in reading the literature and talking to people and reading the articles around there was that people in the larger firms, if you got them talking off the record, said that they were doing a lot of this.  But when the were talking on the records to reporters, most of them were not willing to provide a lot of information.  So I decided to do kind of a confidential survey of the AmLaw 100.  We contacted the Chairman’s Office in each of the 100 largest firms in the United States and asked them if they would participate in a survey of how they were using alternative fees and how they expected to use alternative fees in the future, and we promised them that we would list the name of every firm that participated but we would not attribute any quote to a particular firm in the interest of getting them to speak more generally.  They did have an opportunity to review their interviews and so on to make sure they were accurate, but if you read the report, you will not see a single name associated with a single quote.  The result to that was that people were much more open and honest frankly than you normally see in this kind of research.

Damien Allen:   Are you seeing any trends concerning the demand for alternative billing, and if so, is it being driven by the clients or the firms?

Jim Hassett:  That’s a really interesting question.  The first part of your question, trends, absolutely.  There’s no question that there is more demand for it.  Whether clients are driving that demand or firms are depends on who you ask.  In my survey, I spoke to firms, and they said they were driving it.  There have been other surveys done in which people talk only to clients, and the clients say they’re driving it.  I’m not entirely sure.  I tend to think that there’s more emphasis coming from the firms.  There are a few clients that are very much pushing this, and they tend to be very visible.  But then there’s a much larger number of clients who are kind of fascinated by this, interested in the idea, think they might want to do it, but they’re really not pushing to do it.  My belief is that more of the action is coming from the large firms that are interested in pursuing this and small ones.

Damien Allen:  What are the reasons that law firms are adopting alternative billing?

Jim Hassett:  Honestly, I think the biggest reason these days is because they have to.  They see it as the wave of the future.  Whether clients are willing to implement it immediately or not, there seems to be little doubt that this is the direction that the world is going.  When I published my survey last week, the forward was written by Bruce MacEwen, who is well known for writing the blog, Adam Smith, Esq. (adamsmithesq.com), and he stated it very succinctly.  He said what’s really happening is that the market share of hourly billing is going down, and the market share of non-hourly billing is going up.  Firms that kind of want to get ahead of this and get a piece of the pie are the ones who are very active in pursuing it.

Damien Allen:  Besides that, what advantages to the firms themselves see in alternative billing approaches?

Jim Hassett:  It’s possible to make more money doing this if you do it correctly, if you control your costs correctly, if you manage projects a little bit differently, if you work with clients correctly, but honestly, I think that the primary reason is not so much because firms see that this is better for them in the short term.  It is better for them in the long term because this is what they have to do to stay competitive.

Damien Allen:  Your research focused mostly on large firms.  Do you see any trends with regards to alternative billing for smaller firms or solo firms?

Jim Hassett:  Absolutely.  There is enormous literature on the smaller firms who are doing this, and it’s a lot easier to do in a smaller firm.  It does require certain changes in the way you operate, and if you’re trying to get 1500 lawyers to change they operate as opposed to yourself and a couple of partners to change that you operate, it’s clearly a lot easier to implement in smaller firms.  There are a number of small firms that are pretty famous for doing this, notably probably Valorem in Chicago is one of the ones that’s best known, Bartlett Beck Summit Law Group in Seattle.  There’s quite a few law firms that are leading the charge on the smaller side.

Damien Allen:  How would one be able to get a copy of this research you conducted, Jim?

Jim Hassett:  Probably the easiest way is to look on my web page, www.legalbizdev.com, and you’ll see any number of links to the research itself. 

Damien Allen:  Could you tell us a little bit about the West Legal Center presentations that you posted?

Jim Hassett:  West Legal Ed Center asked me to do a public presentation summarizing the primary findings from the survey.  Last Thursday, which was the day the book came out, I did an hour long audio presentation, which is actually still available through the West Legal Ed Center.  They provide those sessions both in real time and then also have the links to recordings of them, so you could probably find that pretty easily by going to West Legal Ed Center and putting in my name.

Damien Allen:  We thank you very much for joining us today and giving us a little information on alternative billing.  You can find more information about this subject up at <legalbizdev.com>.  Jim has an ongoing series of blogs up there that you can check out, and we thank you very much for joining us today.

Jim Hassett:  Thanks for your time.

Damien Allen:  You’ve been listening to GAL Radio.  My name is Damien Allen.  Everyone have a great afternoon.

Jim's blog LegalBizDev.com was selected at the American Bar Association 2009 TECHSHOW for 60 Sites in 60 Minutes, a review “of the latest and greatest sites on the Internet”...

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