Discussions of alternative fee billing was not new, but Chesler’s article coincided with the disastrous economy and countless articles and discussions followed that all ended the same: the billable hour was no longer going to work and a change had to be made.
Details of actual alternative fee deals were minimal, however, and all big firm attorneys we’ve talked to are all still billing away, if at cut rates.
But today a story in The Recorder discusses the arrangement of Levi Strauss (definitely a big name client) and Orrick, Harrington (definitely a prominent firm), and the deal is inarguably aggressive. The big upshot for Orrick is that it is also quite exclusive.
The Recorder: Orrick will handle all of Levi Strauss’ legal work worldwide in exchange for a fixed yearly fee paid in monthly increments. Levi Strauss will keep only one other firm, Townsend and Townsend and Crew, to continue its brand protection work. Where Orrick doesn’t have an office, the law firm itself will retain and pay outside counsel.
The article discusses how the firm and Levi’s recognise that it will have to be somewhat of a developing system, and both appear to trust the other to adjust the deal as necessary, or if a particular matter that will not work within the system crops up.
Anyone who has ever watched a partner develop a litigation budget based on the hourly model knows it’s a science. But that budget is of course just a projected one — what clients really pay is some version of however many hours it actually turns out to be.
Alternative fee arrangements therefore carry some risk if you do not know how to do it right. Plaintiffs’ lawyers we’ve spoken to, who have been doing this sort of billing for years, said alternative billing is definitely a learned skill, but one that is possible.
Whether the billable hour will actually be buried remains to be seen, but many firm partners are probably reaching out to Karen Johnson-McKewan, the Orrick partner who worked out the deal with the Levi’s general counsel over the course of a year, to hear about just how she did it.
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