The recent financial crisis and ensuing economic uncertainty have caused law firm clients to scrutinize budgets and competitive pricing more than ever. As a result, the legal industry has become increasingly familiar with alternative fee arrangements and demonstrating value.
In the most recent “Law Firms In Transition” study released by legal consulting group Altman Weil, 80% of firms responding said that non-hourly fee arrangements would be a permanent fixture. In addition, more than 90% of responding firms said that price competition was a trend that they didn’t expect to go away. “Strong majorities” of law firm leaders indicate that “the practice of law will be permanently characterized by pricing pressures, further commoditization of legal work, new forms of competition and thus a need for improved practice efficiency.”
According to Altman Weil principal Tom Clay, “Maintaining and growing profitability will be much more difficult going forward and will require rethinking key elements of the law firm business model.” While our attorneys and business managers are certainly familiar with the details of these arrangements, legal marketers need to be aware of industry trends, types of billing arrangements sought by clients, fee structures offered by our firms, and what other firms are putting forward.
So what does this mean for legal marketers? More RFPs seeking alternative fee arrangement proposals, increased emphasis on demonstrating value, and (according to Altman Weil) the importance of understanding that “the recession…either introduced or cemented existing trends in a way that altered the landscape of the legal marketplace.”
More on Alternative Fee Arrangements:
AFAs: What’s The Big Deal? (Jaffe PR)