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The billable hour is coming to an end, thanks to AI and analytics | Raconteur

“Law firms are looking for different ways to charge for their services, especially in the corporate market where clients are just not accepting the old way of billing,” says Dani McCormick, director of solutions at Lexis Nexis.

Billable hour alternatives price up value, rather than time spent
The billable hour has long been the bedrock of how the legal profession works out how much to charge clients for their services. Fee earners log the time they spend on client work each day, usually in six-minute increments, and this helps them to provide clients with accurate bills and keep track of annual billing targets.

While this model was effective in the past, critics say its rigid structure is incompatible with the current market, where clients are more price conscious, and see more value in project-based pay and success fees.

Most legal work these days merits an alternative billing method, says Nick Pryor, regional innovation solutions director for Europe, the Middle East and Africa at Bryan Cave Leighton Paisner.

He says his firm frequently prices work according to the value of the solution provided to the client, rather than by the hour, adding: “Our lawyers’ contribution is augmented by a diversity of other tools and skills, and so it rarely makes sense to price solely by reference to the lawyer’s time investment.”

Crucially, Mr Pryor says his firm’s early adoption of data analytics played a crucial role in the way it bills clients. “This makes it easier and more reliable to predict the legal effort involved in resolving different matters, which in turn enables law firms to provide more price certainty to their clients and share the risks more effectively,” he says.

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The billable hour is coming to an end, thanks to AI and analytics.

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