In spite of the well-publicised drawbacks of charging by the hour – that the incentive is for firms to spend as long as possible on a particular matter; that fees are largely divorced from the value delivered; and that it promotes the long-hours culture that still dominates the profession – most lawyers have been slow to embrace change. The forthcoming changes in the market will provide the kickstart that many firms need, albeit perhaps too late for some.
Some of the larger firms have started to accept the need for new billing practices, but even this has been limited. In any case, this is merely the tip of the iceberg. Firms throughout the market will need to fundamentally alter their processes and methods of delivery, in order to compete with providers well-versed in the commercial imperatives of efficiency and low-cost service provision.
Establishing the value of services provided without the aid of hourly rates, and away from the simple ‘cost-plus’ mentality prevalent in some areas, will not be an easy task. However, firms must be able to demonstrate clearly the value they bring to their clients, and it will not necessarily be a simple question of price competition. Quality of service and relationship management will also be crucial ingredients in the value proposition.
That said, there will also be areas in which competition will necessarily be with low-cost providers, and firms that cannot compete in terms of efficiency will not survive long. This is something that needs to be tackled now, not as and when the issue arises.
A Different Approach
It will not be enough to change processes or look to compete in areas other than price – differentiation will be at the heart of the new market. Firms that do not know how to market themselves and their brand, to existing clients as well as to prospects, will lose out and will be waving goodbye to more than their old timesheets.