The Future of the Fixed Fee in Law
What’s the future of the legal profession?
I’m actually a senior fellow at Harvard in the program on a legal profession. I write about this a lot. I was very involved in sort of changing the way inside lawyers to do their jobs. I believe that there is a major change because of the economic conditions where corporations are putting tighter budgets on law firms which is why law firms are being forced to either lay off partners, senior associates and they’re not hiring as many young people. I think that for people going to law school—and I think that this is a good thing to be perfectly honest, they need to think of other kinds of careers and there are many opportunities in the public sector and the non-profit sector that they can take advantage of.
So I do think that we’re going to see a decline in legal business because corporations are just going to be tighter on their budgets and that’s going to last for a long time, and that will mean less business for law firms. I also think and I’ve written about this that we’re going to move away from the hourly billing rate towards something called a fixed fee where basically you pay a price for a legal service even if it’s a complex one. We don’t build fee for service on an hourly basis. It’s a problem in the medical profession, it’s why healthcare costs are running away. The problem with legal profession is why legal costs are running away so we’ve got to solve the problem in both the law and medicine.
Is this something that’s soon to come?
The fixed fee arrangements, what are called alternative fee arrangements are definitely in a number of firms and in a number of major corporations are pushing very hard to change the economic relationship.
When I came to GE, we changed the paradigm for inside lawyers. We got great lawyers to come inside and that meant that there could be more cooperation between the inside lawyers who are the equal of the outside lawyers on matters, but there was always a dispute about money. What the fixed fee will do hopefully will create a partnership on the money as well as on the matters and that would beneficial both for the companies, for the law firms and I think for the public interest.
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