Mayer Brown and Reed Smith set to champion fixed fees
Author: Emma Sadowski
16 Sep 2009 | 11:31
Mayer Brown is looking to move away from traditional hourly billing models, with plans to bring in fixed or capped fees for transactional work.
Mayer Brown's senior management is in the process of reviewing how the firm bills clients and is considering proposals to overhaul fee structures for core transactional practices including corporate, banking and real estate.
The proposed changes, which the firm said have been accelerated as a result of client demand for greater certainty during the downturn, would see Mayer Brown offering fixed fees for all transactional work, as well as more regularly using abort agreements and success fees.
Mayer Brown executive partner Jeremy Clay commented: "If we are to build our client relationships we have to develop pricing structures which meet these priorities. There seems little doubt this type of pricing is an important factor when getting and developing new client relationships.
"We are in the process of reviewing fee structures. We are focusing on this initially from a transactional point of view. The genesis of it is that client expectations have changed and are continuing to change."
Separately, Reed Smith has also been looking at changing fee structures within its transactional practices. The firm has a committee made up of partners from across the firm reviewing proposals and is looking at an increasing use of fixed or capped fees for clients within its financial industry group (FIG), corporate and real estate practices, for transactional work.
Reed Smith global FIG chair Paul Johnston said: "We are looking at alternative fee structures and have been for some time now. This is in part driven by clients and in part our wish to be innovative when it comes to pricing our work.
"We know that most clients want certainty of cost and value for money - our prime focus is to provide that."
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COMMENTS (TOTAL 4 COMMENTS)
Setting up committees to study an issue is not the same as changing fee structures. Nor is it terribly meaningful when the firms don't bother to address the number one area clients complain about - litigation. Time to smell the difference between PR babble and news.
Patrick Lamb -18 Sep 2009 | 15:25
Offering to take on every transactional mandate on a fixed fee basis is a pretty big commitment. And good on them - this is exactly the kind of play that upwardly mobile firms outside the top tier should be making.
Anonymous -21 Sep 2009 | 08:45
Bespoke Law has also moved away from time sheets in place of flexible fee models, such as fixed fees.
Bespoke Law -21 Sep 2009 | 12:04
Assumptions
You can offer fixed fees but there has to be a whole raft of assumptions put to the client. If the client has a particular knotty legal problem which would normally take 100 hours but you have offered to do a straightforward transaction based on, say, 10 hours it will cost you money, more specifically when the market improves as it precludes you from doing other more profitable work. In essence, fixed fees are good but assumptions have to be built into it so the error is, say, 10% either way on what the time charge would be.
Garry -06 Oct 2009 | 17:14
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