Jill Nelson explains why modern pricing problems require a modern pricing solution
- The problem with the billable hour: friction between firms and their clients.
- Opening a window of visibility: the inaccuracies inherent in pricing, and the lack of client visibility throughout the process.
Since the Great Recession and financial crisis (crises) of 2008, the client’s faith in the billable hour has been shaken, causing many to look for alternative systems of dealing with their matters. Some clients may opt to create an in-house legal team, while others may push for Alternative Fee Arrangement (AFA) based pricing, rather than the billable hour. This sharp reversal on a form of pricing that had been practised since the 1960s, has dramatically shifted the status quo: strengthening the value of in-house legal firms, while undermining the profitability of traditional law firms. So what is the problem with traditional pricing, and why is this having such a significant impact on the way we practise law?
The problem with the billable hour
The billable hour inevitably led to friction between firms and their clients, as
