"Is hourly billing the best way to capture and communicate value in law firm pricing?"

Widdop, Anthony (2008) "Is hourly billing the best way to capture and communicate value in law firm pricing?". [Dissertation (University of Nottingham only)] (Unpublished)

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The subject of legal fees and value goes right to the heart of the law firm-client relationship and in recent times has become a hot topic in the industry. With internal pressure on clients to manage costs in tough economic conditions, firms are being pushed to better demonstrate the value they create. At the centre of this debate is the current pricing standard, hourly billing.

This report investigates whether hourly billing, as currently practiced, is the best way to capture and communicate value in legal services. To gain insight into the perspectives of those in the industry, semi-structured interviews were conducted with senior pricing decision makers from top international law firms and FTSE 100 client organisations. Discussions focused on the success of the current model, experiences of alternatives and the future for pricing in the industry.

The report argues that hourly billing, as currently practiced, is a weak tool for capturing and communicating value as not all hours represent the same level of value for all clients. Reform is proposed through further differentiation of hourly rates and an adapted two-part model. The current fixed fees model is also enhanced through a risk efficient model that captures scope change on projects.

The report concludes that a hybrid pricing approach has the potential to realign incentives in the law firm-client relationship, with the model to be used dependent on the type of law firm, client and project.

Item Type: Dissertation (University of Nottingham only)
Keywords: pricing, hourly billing, law firms, professional services, value.
Depositing User: EP, Services
Date Deposited: 13 Nov 2008
Last Modified: 24 Sep 2016 16:28
URI: http://eprints.nottingham.ac.uk/id/eprint/22116

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