Is the Billable Hour Dying? Here’s More Evidence That it Might Be

[WSJ_law_blog]

Dating to about five minutes after the billable hour was born, folks have been predicting its death. But throughout it all, no other billing method has come close to knocking the billable model from atop its lofty perch.

Until now, it seems. According to an article in Legal Week, both Mayer Brown and Reed Smith are looking hard at moving to fixed or capped fees for their transactional work. is looking to move away from traditional hourly billing models, with plans to bring in fixed or capped fees for transactional work.

In regard to Mayer Brown, Legal Week reports:

Mayer Brown’s senior management is in the process of reviewing how the firm bills clients and is considering proposals to overhaul fee structures for core transactional practices including corporate, banking and real estate.

The proposed changes, which the firm said have been accelerated as a result of client demand for greater certainty during the downturn, would see Mayer Brown offering fixed fees for all transactional work, as well as more regularly using abort agreements and success fees.

Mayer Brown executive partner Jeremy Clay commented: “If we are to build our client relationships we have to develop pricing structures which meet these priorities. There seems little doubt this type of pricing is an important factor when getting and developing new client relationships.”

On the Reed Smith front: Legal Week reports that the firm is looking at “an increasing use of fixed or capped fees for clients within its financial industry group, corporate and real estate practices, for transactional work.”

Reed Smith global FIG chair Paul Johnston said: “We are looking at alternative fee structures and have been for some time now. This is in part driven by clients and in part our wish to be innovative when it comes to pricing our work.

Need more datapoints? Above the Law recently got a hold of O’Melveny & Myers’s five-year plan, which announces the intention of “becoming the leader in providing high-end legal services on a fixed fee basis, reducing costs to clients and achieving superior economic performance through practice management oriented toward cost effective client service.”

Last month, Nathan Koppel and I wrote this page-one story in the WSJ, discussing a new flat-fee arrangement developed by pharmaceutical giant in connection with several outside law firms, including Skadden, Ropes & Gray and Boies Schiller.

Photo: iStockPhoto

They always say this in a recession and then it never happens.