Alternative Billing Increasingly Important for Law Firms, Survey Shows

Balancing the risks and rewards of using alternative billing, such as fixed or contingent fees, is a strategy many firms are employing in today’s uncertain economy, based on responses from the 74 firms that participated in Texas Lawyer’s 2009 Salary & Billing Survey.

Other strategies include holding hourly billing rates stable and requiring that new clients pay higher front-end retainers. Some firms froze associate salaries earlier this year, while just last week Howrey, a Washington, D.C.-based firm with a 45-lawyer office in Houston, announced a new compensation program for first-year associates that calls for more training during their first two years on the job, but at a reduced salary and with reduced billable-hour requirements at a lower billing rate.

Eighty percent of the 74 firms participating in the survey say they use some form of alternative billing. Flat or fixed fees are used by 45 percent of the firms, contingent fees by 31 percent and blended fees by 45 percent. More than half of the firms, or 66 percent, say that they discount fees.

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