TAGLaw Firms Willing to Give Clients a Break on Fees

By Larry Bodine, Esq. of Glen Ellyn, (Chicago) IL, a business developer with 18 years experience who helps exclusively law firms attract and keep more clients. He conducts business development training through Apollo Business Development. He can be reached at 630.942.0977 and Lbodine [at] Lawmarketing [dot] com.

According to a December 8, 2009, LexisNexis survey, 46% of in-house lawyers say they have asked their outside counsel to lower billing rates but only 18% of firm lawyers report that they have done so. However, the parsimonious approach of some law firms doesn't apply across the board.  In fact, in a new survey of TAGLaw network firms, 49% indicate they will decrease their rates by more than 10%, and 42% plan to keep their rates the same.

"We were surprised, you might be too," TAGLaw states on its website. The TAGLaw survey is dated December 18, 2009.

Perhaps the more generous nature of TAGLaw firms is based on their size and location. TAGLaw is a global alliance of 140 independent law firms based in nearly 100 countries.  Its 7,500+ lawyers work out of 300 offices to provide a full range of legal services to clients all over the world. 

TAGlaw member firms tend to be midsized, ranging from 375-lawyer Baker and Daniels in Indianapolis to elite boutiques like 38-lawyer Belin McCormick in Des Moines.  Founded in 1999, TAGLaw ordinarily has only one law firm per state, except heavily populated states like California.

49% of the TAGLaw respondents were based in North America and 39% were based in Europe.  The small balance were based in Latin America, the Asia Pacific region, Africa and the Middle East.

LexisNexis surveyed associates and partners at law firms practicing in the U.S. -- 100 from firms with 10 or less attorneys (small), 100 from firms with 11-99 attorneys (medium), 100 from firms with 100 or more attorneys (large).

Rate cut requests

The TAGLaw survey also asked, "How many of your clients have required a reduction in fees over the past two years?" 

• 49% of member firms said "none."
• 41% of member firms said 25%.
• 5% of member firms said 50%.
• 5% of the member firms said 75%.

The results are subject to a variety of interpretations. One is that the fees of TAGLaw firms are already in line with what clients are willing to pay.

Interestingly, most TAGLaw members also indicated that they make little use of alternative fee arrangements in 2010.

Only 19% of TAGLaw members said that they would use alternative fees on more than 20% of their files.

In contrast the LexisNexis survey found that:

• 41% of private practice attorneys say their firms have offered alternative fee arrangements.
• 57% of corporate counsel believe the billable hour will give way to alternative billing arrangements incorporating flat fee and performance based payment models.
• 40% of in-house corporate lawyers requested or implemented alternative fee arrangements beyond the billable hour since the start of the economic downturn in September 2008.

The key step is to ask

What's the bottom line? As always, I recommend you turn to marketing 101 and (1) ask the clients what they want and (2) sell it to them. The key step is to ask -- by visiting the client and talking to them about how your law firm can help them generate more revenue and reduce risks or at the very least by conducting client satisfaction surveys. The pricing decision will turn on what the client views as value  -- if your firm provides a valuable service at an hourly rate, then stick with it.  Some clients actually don't want alternatives fees, and are more comfortable with the hourly bill. If your client wants you to be more efficient and charge less, then you must figure out a way to do so.