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Billable Hour Under Attack

  • AUGUST 25, 2009
'Billable Hour' Under AttackIn Recession, Companies Push Law Firms for Flat-Fee Contracts

With the recession crimping legal budgets, some big companies are fighting back against law firms' longstanding practice of billing them by the hour.

The companies are ditching the hourly structure -- which critics complain offers law firms an incentive to rack up bigger bills -- in favor of flat-fee contracts. One survey found an increase of more than 50% this year in corporate spending on alternatives to the traditional hourly-fee model.

The shift could further squeeze earnings at top law firms. The past 18 months have been brutal for some big law firms as work that hinges on vibrant credit