Sign of the Times?

Evan R. Chesler, presiding partner at Cravath, Swaine & Moore, believes that "This is the time to get rid of the billable hour," according to an article in today's New York Times. Because of the economic downturn, some budget-conscious clients have persuaded firms to move away from the iconic billable hour in favor of "flat fees for handling transactions and success fees for positive outcomes, as well as payments for meeting other benchmarks." According to Mr. Chesler, these alternatives represent a small percentage of the firm's business, but would not discuss specifics of rates and prices. Smaller firms and solo practitioners have offered services on a flat-fee basis for some time, and plaintiffs' lawyers work on contingency. However, large firms have traditionally stuck with the billable hour because their attorneys "grew rich from the practice," and why kill the goose that laid the golden egg? The article concludes with the observation that "the biggest stumbling block to alternative fee structures may be the managing partners at law firms, who will have to overhaul compensation structures to reward partners and associates for something other than taking a long time to do something."