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Fixed fee, alternate pricing arrangements increasingly offered by firms
The number of Australian law firms providing fixed fee and alternate pricing arrangements continues to grow, according to new research.
Jerome Doraisamy
Global cloud-based legal practice management software Dye & Durham and the Australasian Legal Practice Management Association’s (ALPMA) the Australasian Changing Legal Landscape Report is an international research project involving 226 law firms across Australia and New Zealand.
It surveyed individuals’ perceptions of their employers’ and the profession’s attitudes towards people and productivity, technology and workflow, business strategy and investment, and recruitment, among other matters.
Earlier this month, Lawyers Weekly reported that, according to the findings, almost all legal professionals believe that being able to work a four-day week would improve their work/life balance, but much fewer believe their firms will implement it.
Separate to its findings around workplace and wellness matters, the report explored respondents’ views on value-adds being offered to clients.
It found there has been a “steady” increase in the number of firms across the country that offer fixed fee or alternate pricing arrangements to clients, with 56 per cent offering them in the past year (up from 45 per cent two years ago). The report further noted that another 26 per cent of firms have indicated that they are looking into such pricing arrangements for the coming year.
Taken together – assuming no firm currently utilising such pricing models revert to more traditional modes and that all those indicating interest follow through and offer the models to clients – the profession could have over four in five law firms offering fixed fee and alternate pricing arrangements to clientele by this time next year.
The findings are part of a trend away from more traditional pricing models, particularly in light of recent economic pressures and the rise of artificial intelligence. With regard to the former factor, the managing principal of a Queensland-based firm with a headcount of 70 told Lawyers Weekly earlier this year that law firms that increase charge-out rates in the face of high inflation are “selfish, fat, and lazy”.
On the latter factor, some commentators have suggested that the mainstream emergence of platforms like ChatGPT means that billable hours will “inevitably decline”. New technology notwithstanding, NewLaw practices and alternate legal service providers (ALSPs) have been advocating new pricing models in a post-pandemic world for some time.
If nothing else, firms may be motivated to re-evaluate their pricing structures in the face of discontent from government or corporate clients, with research from Agile Market Intelligence and Lawyers Weekly last year finding that only one in two in-house lawyers are happy with the pricing structures offered by their external providers, while 14 per cent of respondents said at the time that they were either “dissatisfied” or “extremely dissatisfied” with charge-out rates from their panel firms.
Other value-adds being offered by firms offer an interesting insight into what legal practices are viewing as necessary services for clients, whose demands and expectations have shifted in the post-pandemic climate.
For example, more than one in two (53 per cent) of firms now offer access to other professional services experts within their firms, up from 45 per cent last year. Moreover, access to senior legal professionals remains up, with 63 per cent of firms offering it this past year, compared to 52 per cent in 2022.
Elsewhere, the number of firms offering a ‘personalised service’ sits at 68 per cent in this year’s report, down from 90 per cent in 2019. However, Dye & Durham and ALPMA wrote: “This is likely not due to a reduction in this offering but more so an adoption of this service being standard practice as opposed to being defined as a ‘value add’”.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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