A Legal Week article Fixed-fee billing favoured by 50% of corporates, LW research finds reports on research which shows that fixed-fee billing arrangements are favoured by 50% of corporate clients. The target here is not cut-price lawyering, although all clients want to spend less this year than they did last, but the ability to budget. Eversheds partner Stephen Hopkins is quoted in the article as saying:
Most GC’s do not want cheap; they want quality and efficiency, but most of all they want certainty”.
Where have we heard this before? It is one of Lord Justice Jackson’s key findings in his report on litigation costs that lack of certainty and transparency in litigation is a major deterrent, something which discourages clients from engaging in litigation at all if they could help.
“But litigation is different” cry the lawyers “and is simply not susceptible to fixed fee billing”. It is certainly right to say that litigation has the potential for the unexpected, whether that lies in the raising of new and unexpected issues, in aggressive (or incompetent) conduct by opposing parties, or in some unforeseen aspect of eDisclosure – the 50GB which turns into 2TB, the five custodians which become 10 custodians, the unexpected presence of encrypted or foreign language files, or in the emergence of a protracted procedural dispute which had not been foreseen. All this militates against fixed fee arrangements.
But it is fixed fee arrangements, according to the Legal Week article, which make clients happy and therefore more likely to send a firm its next instructions. That involves, perhaps, the willingness of the lawyers to share risk to some extent with their clients. Above all, it involves the ability to assess costs, and possible deviations from anticipated costs, by reference to past experience.
There is no other major project (and litigation can become a major project) into which commercial clients enter without some idea of the cost. That is what they expect when they plan to construct a building, to make a film, to acquire a company or to do whatever it is that type of business requires. Why should litigation be different?