Thursday, January 15, 2009

Value Billing -- The UK Way

Following my recent post on the billable hour, I saw an article in about how firms in the UK have never fallen as hard for the model as American firms. Of particular interest to me was the reference to the model used by Slaughter and May, a distinguished old-line London firm. As Nigel Boardman, a partner explains, Slaughter and May has never billed clients by the hour, nor do partners and associates have any targets for hours worked. "At the end of a deal we sit down with a client and ask, 'How good a job do you think we've done?'" says Boardman.

This reminds me very much of my early days as a litigator at the venerable -- but now defunct -- firm of Thacher Proffitt & Wood. At the end of case, the billing partner would ask the associate (typically only one) to bring the file into his office. The partner would look at the number of substantive documents/pleadings that were in the file, adjust for case results, and then announce the amount to be charged for services rendered. This amount was then discussed with the client and invariably approved. It was value billing in a very pure sense.

When I think back on that approach, I wonder how much better both Thacher and the client would have been with the knowledge that comes from the benchmarking data available with e-billing. Thacher would have been able to accurately predict the fees for a client, a must have for any in-house lawyer today. Moreover, Thacher would have been able to use e-billing data to create success based alternate fee arrangements that increased the premium that it received for an excellent, as opposed to adequate, result.

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