Make More Rain : alternative billing, cash flow issues

Thoughts on the ACC/Serengeti Managing Outside Counsel Survey

MichelleStPierre — Thu, 22 Oct 2009 18:16:00 GMT

The 2009 ACC/Serengeti Managing Outside Counsel Survey , as reported at Association of Corporate Counsel's annual meeting this week in Boston , has some interesting notes which are relevant to what we've been blogging about lately: Predictability...(read more)

Know Your Alternatives: Retainers - Using an Old Friend

RussHaskin — Fri, 16 Oct 2009 19:26:00 GMT

The reality is that the majority of firms have concerns when it comes to their billing and collection practices. There is a lag in activity and that causes a loss in realization and an opportunity lost for re-investment (Time Value of Money.) That said...(read more)

Opportunities Abound with Alternative Fee Arrangements

DerekSchutz — Tue, 04 Aug 2009 13:00:00 GMT

We've heard from a lot of clients recently on the subject of collections and cash flow. It seems like everyone is talking about it, probably because they are concerned that they are going to be caught on the wrong side of the equation. Having a fair amount of insight into the financial statistics of more then a few law firms, I have to say that I definitely understand why law firms are nervous. I, and others, have written numerous articles on the dangers of aging inventory and the issues of poor cash flow management. In my job as a consultant I have advised clients with these problems in their firms' business models. That part is easy. The part that is much harder is coming up with viable solutions. Telling law firms to simply bill and collect faster is, well, too simple. Sure a firm can more often then not send bills out the door faster, but how do you improve the pace of collections?

...(read more)

Law Departments Move Alternative Pricing to Short List

Admin — Fri, 30 Jun 2006 16:55:15 GMT

Rees Morrison reported that the InsideCounsel/DataCert Annual Report of Corporate Law Departments listed the top steps taken to reduce corporate legal cost. The list was derived from a survey of 180 law departments.

The top five cost reduction steps included:

1. Bring work in-house
2. Use of interns, paralegals or temporary staff
3. Moving to alternative fee arrangements
4. Preferred provider programs to reduce the number of outside law firms
5. Cutting staff

I was surprised by the third item on the list. Close to one-third of the surveyed firms reported using alternative fee arrangements to lower cost. Of course, we don’t know how extensively each of those firms is using alternative pricing, but it is worth noting that it has moved up in the consciousness of the General Counsel.

While the hourly bill is still king, we continue to encourage law firms to propose alternative arrangements wherever possible.

You want your alternative pricing approach to provide the firm with the opportunity to increase margins through efficiency while reducing the client’s cost and increasing their cost certainty. In my book, that means a fixed fee per transaction, project phase, or for a portfolio of business. In more common general business terms, it means packaging (defining scope) and adopting product-like pricing.

Clients want lower cost and certainty of cost, not just cheaper services. The law firm and the client can both win through increased law firm efficiency:

Better scheduling
Use of competent but lower-cost talent where appropriate
Improved reuse of knowledge
Better project management
Taking increased advantage of technology to automate processes
Equipping the client to carry part of the load

In most cases, law firms are viewed by the clients as too good, too expensive, and too complex. Alternative pricing is one way to shift law firm thinking toward “a solution that is good and simple enough for the situation at a reasonable price."

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