If you’ve spent much time on my site, or talking to me in person, you know that I am not a fan of time-based billing, and am a huge proponent of value-based fees. Some of the worst offenders when it comes to time-based billing are lawyers — but the winds of change are beginning to blow in the legal profession. I recently posted a link to an article by Jim and Matt Hassett of LegalBizDev called, The Past and Future of Value-Based Fees and Alternative Fee arrangements.
In Jim Hassett’s latest post, he highlights a report on revenue from alternative fees based on a survey of some of the top law firms in the country:
The best data to date was published two weeks ago in the 2013 Client Advisory [PDF] from the Hildebrandt Institute and Citi Private Bank. It was based on a series of surveys of 176 large law firms (79 from the AmLaw 100, 47 from the second hundred, and 50 additional firms), and shows a slow but steady increase. In 2011, 16% of law firm revenue came from non-hourly AFAs. In 2012 it was 17%, and for 2013 they are predicting 19%.
While in some ways 19% may not sound like much, it is important to emphasize that this implies that the AmLaw 100 alone will perform over $13 billion worth of legal work this year on a non-hourly basis (assuming their total gross revenue stays around $70 billion). And while we may never know whether this percentage is exactly correct, there can be no doubt that it is going up.