February 2007

By Ed Wesemann and Michael Roch

For the past 20 years, law firms have annually increased their hourly rates on the basis of various ad hoc criteria — what the market will bear, matching the competition, cost-plus, maintaining profit margins — that neither firm members nor clients find satisfactory. Alternative pricing methods (fixed fees, percentage of the deal, etc.) have long been advocated as a solution to hourly billing discontents, but in practice, for a large majority of firms they remain limited in application. Firms whose clients expect fees to be charged on an hourly rate basis therefore require a rational means of constructing an hourly rate schedule that is transparent and acceptable to clients as well as defensible within the firm.

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