ALM Legal Intelligence, with sponsorship from LexisNexis CounselLink, has just released an interesting new report, “Speaking Different Languages: Alternative Fee Arrangements for Law Firms and Legal Departments.” Although the name seems to imply that law firms and legal departments approach alternative fee arrangements (AFAs) differently, its principal conclusion is that, “if the billable hour is to go the way of the dinosaur, law firms and legal departments alike will have to overcome some significant challenges.” While most survey respondents on both sides of the relationship reported having used AFAs last year, the numbers dropped off significantly when asked whether more than 10% of their legal work “was valued through an arrangement that is not based solely on hourly rates.”

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I recently returned from a much anticipated vacation that included a visit to the Galapagos Islands, about 600 miles off the coast of Ecuador.  The Galapagos are famous, in part, because of the role that Charles Darwin’s visit there in 1835 played in his thinking about evolution and natural selection.  To some, the islands’ unique flora and fauna are living examples of a process described as “survival of the fittest,” suggesting a bare-knuckled competition for resources and opportunities to reproduce.  Given the abundance of articles and email alerts related to Dewey’s rapidly worsening situation that coincided with my vacation, you might think that I would have been inspired to write a post about Darwinian competition or to add my two cents to the many post mortems already out there.   Instead I want to take a different lesson from the remarkable ways that life has adapted to some fairly inhospitable volcanic islands.

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There has certainly been a lot in the media of late about changes in the legal profession.  We talk about the “death of the billable hour,” the “unbundling” of services, and the more efficient delivery of legal services through “knowledge management.”

But change is hard.  Take the billable hour.  Think about all the systems, structures, cultural artifacts, training, and more that has gone into a model that maximizes the hours billed by law firm associates: bonuses (or job retention in an era of layoffs) tied to hours billed; pressure to track time in 6 minute increments and submit time report daily; rules about when/how meals or transportation can be billed back to the firm or client; and reports about “utilization rates.”  Making lawyers more conscious of being efficient, rather than being “fully utilized” will take more than just saying it should be so, or even changing how law firms bill clients.  Making clients better at articulating what they really need and what trade-offs they do or do not want to make will be essential if non-hours based fee arrangements are going to be sustainable. (Fixed fee models, for example, will simply not work if clients treat them as “all you can eat buffets.”)

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That’s a question I hear surprisingly frequently from individual partners when I work with a firm that is trying to embrace legal project management (LPM) as a discipline.  For better or worse, most firms seem to like to start the process by rolling out a fairly generic version of training on LPM methodologies across their entire partnership.  Such training tends to describe, in an ideal world, how legal matters can be efficiently managed.  But few of us live or practice in an ideal world, and even the best-laid plans lose some of their sharpness when put into practice.  As the oft-quoted line goes “no plan survives contact with the enemy.”

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