The INTA Listserv has a thread going this morning on set fee billing.  While I understand the movement toward set fee billing my stock line is that set fee billing is a gamble between the outside lawyer and the client, and if either side wins big, it isn’t healthy for the trusted counsel relationship.

Set fees potentially address at least two concerns.  The first is the Holy Grail  budgeting accurately.   However you can’t control two major determinants of the size of your legal outlay, namely (1) governments and (2) Other People.

 The second concern is that hourly-based billing contains a disincentive against efficiency in that lawyers get compensated more, the longer they take to do something.  However set fees replace it with an incentive to do things on the cheap.  As one INTA-poster noted, with set fees, the work gets pushed down to the lower and not necessarily better, biller.  Alternately, strict set fee billing can punish the diligent lawyer.

The meta-problem to be solved here ought to be, IMHO, not budgeting accuracy, or using leverage to reduce the outside firm’s profitability, but to instead get better value for the legal dollar spent.  Hard to measure, hard to achieve.

How law firms can improve efficiency is too large a topic for me to blither on about on a Monday morning.  I will only make the uninsightful comment that competition and downward price-pressure (such as requesting set fees),  ought to motivate firms to work on efficiencies.  However getting there is harder than it seems: my co-Blawg Channeler Dennis Kennedy has a piece on e-billing today that suggests that investing in technology such as e-billing may not always increase efficiency.

More on this later.