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December 2, 2010 9:06 AM

ACC/TAL Survey: No Increase in Use of Alternative Fee Arrangements in 2010

Posted by Ed Shanahan

By David Hechler, Corporate Counsel

The Association of Corporate Counsel has been trying to lead a sing-along for the past few years, waving a big baton and encouraging general counsel to try it one more time, with feeling.

The feeling it's been after is the euphoria of genuine change. Change from the billable hour, that is. The ACC Value Challenge is all about alternative fee arrangements, and the vibe has been good since the economy went south. In an earlier era, Susan Hackett, the organization's general counsel, would have been played by Joan Baez singing "We Can Overcome."

But the latest numbers have to be a little discouraging. The ACC/American Lawyer Alternative Billing 2010 Survey is barely danceable. Especially when you look at comparisons to 2009.

Last year six percent of the companies responding spent more than half their budgets using alternative fee arrangements, and in 2010 the number didn't budge. Only five percent said that more than half of their matters handled by outside counsel this year included alternative fees of some sort--down from seven percent last year.

In both years a whopping 67 percent said that the percent of their matters that incorporated such arrangements was a great big goose egg.

In the press release announcing the results, Hackett acknowledged that revolution hasn't exactly swept the country.

"To some, the results from 2010 won't show the significant increases in value-based fee arrangements from 2009 that many expected,” she said. But at least it wasn't disastrous, she noted: "The fact that billing practices did not revert back to the 'way we used to do it' demonstrates that in-house counsel are not retreating."

And there were a few bright spots. This year 38 percent required some firms to cut back their hourly rates (compared to 34 percent last year); 61 percent required them to discount billable hours (compared to 54 percent); and 39 percent required them to offer alternative fee arrangements (up from 31 percent).

In the end, Hackett said, "I was most heartened by confirmation that value-based billing options are becoming institutionalized, and will likely increase steadily year over year."

Click here to see a raw-data breakdown of answers from respondents to the survey (pdf).

 

Responses to both the ACC/TAL survey, and TAL's Law Firm Leaders Survey can be accessed through the following links:

The Client's View

Law Firm Leaders Survey 2010: The New Rules

Law Firm Leaders Survey 2010: The Year Ahead

Law Firm Leaders Survey 2010: Associates

Law Firm Leaders Survey 2010: Billing/Finances

Law Firm Leaders Survey 2010: Demographics/Management

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