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LegalTech Advice
Apr 12, 2023

Leverage tech to build and maintain client relationships

Molly Taylor
Customer Success Manager

Legal technology is key to winning and keeping clients

While the billable hour remains the most popular billing method for law firms, clients are increasingly seeking to move to alternative payment methods, according to a LexisNexis study. Their research found that the most popular alternative fee arrangement (AFA), as agreed by clients, firms, and lawyers alike, was flat fee billing. Coming closely behind were blended fees, retainers, and fixed fees. 

These alternative billing methods give greater importance to efficiency and some actively work to improve it. Legal tech that accomplishes the same goal will fare exceptionally well if law firms decide to make the change over from the billable hour. 

If, or more likely when that change happens, firms that have already implemented efficient legal technologies will have an easier time retaining and winning new clients.

The billable hour might be on the way out

Alternative fee models are on the rise - those opposed to the billable hour model argue that it discourages efficiency, actively rewards inefficiency, and doesn’t accurately reflect the workload. It then begs the question, what do clients want from their solicitor? The answer is that clients would seemingly prefer a fee model that offers more of a sense of certainty regarding what they are paying for. 

Law Gazette reported that one of the reasons firms had been moving away from the traditional model was because their clients were hesitant to move forward with them unless they were able to, at the very least, have conversations about alternative fee arrangements. 

In the UK, the number of law firms offering alternatives like fixed or capped fees rose from 28% in 2020 to 43% in 2021, according to BigHand. This trend will have far-reaching consequences for law firms. 

One such consequence is that they will be required to adopt legal tech to speed up what would have once been billable time, under the billable hour model. Under a fixed, capped, or flat fee, time is a more precious commodity. Work must be completed quickly and efficiently because the fee has already been agreed upon. 

Legal technology improves efficiency 

As more firms move away from the billable hour and begin to offer alternatives, efficiency becomes more valuable. The implementation of fixed and capped fees means lawyers must be far more conscious of the amount of time they are spending on their activities, because the longer they take, the more it will cost their firm. 

For example, when a fixed amount of time or money is already in place, it becomes counterintuitive to spend longer on work that could be completed within a shorter time frame. Under the billable model, it would make more sense to complete a task that takes an hour, in exactly one hour, even if it could be easily finished in less time. But, with a fixed or capped fee, efficiency is more likely to be rewarded because firms may offer bonuses or other incentives if work can be completed under budget. 

Technology has the means to increase efficiency, particularly for activities that would have once been billable, such as document drafting. This legal tech can also increase the speed at which non-billable activities are accomplished, which is yet another bonus. It no longer becomes a matter of quantity over quality, as critics argue the billable hour currently advocates.

With this trend toward AFAs, legal tech can transform legal practitioners’ careers and help swing the pendulum toward quality. In doing so, firms become more enticing to prospective clients, and it’s clear law firms understand this. According to a survey by Bloomberg Law, 85% of law firms say their adoption of alternative billing methods was to satisfy client demand. Similarly, 90% said legal tech played an important role in meeting these demands. 

Indeed, according to an Apperio survey, 44% of respondents expected that adding technology to their workload would increase both their efficiency and productivity. Work that would have once been considered “non-billable” and “billable” benefits from this addition. Since both can be completed faster, firms can take on more work on a flat fee or capped fee basis, without suffering a revenue loss. 

This means the initial cost of onboarding legal tech is covered by the potential profits gained from attracting more clients, particularly as firms move closer to fully embracing alternative billing models. It also means lawyers can immediately see the value in their work, incentivising a more efficient workflow. 

Leverage legal document drafting software to stay on top

Efficient legal technology will play an essential role in the future of law firms, as they begin to move away from the billable hour model. As we have briefly mentioned, legal document drafting software, like Definely Draft, will complement this move, allowing lawyers to complete their work efficiently, but also to a higher degree of quality. 

Client satisfaction is clearly a benefit of higher quality work, but the ability to provide quality under the constraints of the billable hour and any other alternative fee arrangement will create an even better incentive for clients in their search for a law firm. 

Document drafting and proofreading solutions that utilise AI are an incredibly effective tool in this regard. They act as a preventative measure, ensuring that mistakes and errors are caught long before the documentation is finalised, with software that flags missing or incorrect information for the user. 

The time-saving aspect of these tools is also unrivalled. Easy-to-access templates and fillable forms mean documents can be drafted in minutes, whereas before they may have taken hours to type out manually. 

Some software targets these errors in intuitive ways. Definely Draft includes a “nudge” feature that pops up when lawyers attempt to close down the document they are currently working on, letting them know if there are any undefined or unused terms they’ve missed. This helps prevent costly problems down the line as lawyers can easily add these definitions in. Clients appreciate clean and high-quality documentation that suggests exceptional attention to detail in the drafting process; it gives them confidence in the firm's ability to represent them. 

Law firms that implement this technology now and ensure their lawyers are equipped to master it, will demonstrate to current and prospective clients that, regardless of the billing method, they will be able to provide quality services. And, they’ll do it through effective solutions

Law firms must strike while the iron is hot 

The trend towards alternative fee arrangements comes at a time when law firms are billing fewer hours than they have in decades. The Financial Times reported that, across 170 US law firms, the average monthly billable hours of a lawyer was just 119 hours, the lowest it has been since this data began being tracked in 2007. 

Proven legal technologies like Definely Draft must be utilised to ensure firms are ready when AFAs become the main income stream. If the billable hour sticks around for a few more years, this same technology can ensure clients are receiving a quality service that is representative of the cost. 

Book a demo today, and discover how Definely can provide law firms with the tools they need to support their legal client retention strategies and ensure they are ready for any billing method. 

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