Last week, Bruce MacEwen of Adam Smith, Esq. posted on alternative billing with his post, "Let's Assume Everyone Here's An Adult." His post discusses the McKinsey method of billing and suggests that it might work for lawyers, too -- IF they want to change. McEwen opines that law firms haven't moved away from the hourly billing model because that's how everyone else is billing, and lawyers, being risk-averse, want to know 'who else is doing it' before they're willing to take on new ideas.
But McEwen cautions that,
"the billable hour gravy train may be running out of running room. After all, you cannot increase forever:
- total annual billable hour expectations
- hourly rates
- leverage ratios of associates to partners, or
- hours consumed by projects, cases, and transactions your firm has done before many many times.
If, then, firms cannot forever play the game of increasing revenue through increasing all the metrics orbiting around the billable-hour model, they may have to find another way."
The 'McKinsey Billing Model' (as McEwen calls it) may not be the answer for every law firm. But that doesn't mean this model or other models couldn't work. The hourly billing model will increasingly fails to benefit both lawyers and their clients. Just because a particular alternative isn't right for a specific firm or their clients doesn't mean the firm should stop seeking options that would work better.