“Ultimately the billable hour will die”

A panel of legal experts has predicted the death of billable hours. What does this mean for how lawyers will deal with clients in the future?

The future of law will see the billable hour slowly being replaced by other types of payment according to leading legal experts who spoke at the University of Technology Sydney (UTS) earlier this month.
“I think ultimately the billable hour will die,” said Sharon Cook, managing partner, clients, at King & Wood Mallesons Australia. “I would imagine that less than 50 per cent of what we do would be on an hourly rate.”
Cook highlighted the current trend of legal panels bidding for work from clients on a fixed-fee basis as proof that this shift away from billable hours is already taking place.
Michael Williams, partner at Gilbert Tobin, agreed but said the future remained uncertain.
“There’s a bigger question about whether in fact lawyers are going to move to models which maintain, and in some instances actually increase profitability…”
Billable hours were “bad for lawyers in many contexts,” Williams said. “It’s sometimes been said that two thirds of the legal work that lawyers do is probably a little bit overpriced but one third is drastically underpriced.”
One obstacle is that certain clients still ask for services on a billable hour basis, he added. “If they perceive the value as being better delivered by a fixed amount, they’ll insist on a fixed amount.”
However the true value of a piece of litigation was worth more than the number of hours spent on it, Williams said, leaving it up to lawyers to implement better payment models in the future.

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