Earlier this week, I saw an article by Dan Roe with Legal.com about how contingency fees were on the rise in business and commercial litigation since the beginning of the pandemic.
But lest some think this means BigLaw may be getting ready to stride into a lucrative new area that frees them from the tyranny of the billable hour and downward rate pressure, think again.
Most of BigLaw, whose business models are primarily based on the billable hour, is not wired to deal with a different business model. The contingency fee model (and for that matter, alternative fee models) are based on the unique notion that less is more. The less time spent on a case and the sooner a trial date is set means lower costs and more profit to the law firm. (Assuming, of course, that the work being done is adequate to achieve the best overall financial result on the matter). The billable hour model is just the opposite: more is more. The more time spent on a matter and the longer it takes, the more money the firm makes.
Everything about BigLaw economics, including firm culture, is based on the billable hour model
Well, you say, it should be an easy switch, right? Wrong. Everything about BigLaw economics, including firm culture, is based on the billable hour model. The more is more model.
Take associates, for example. It makes sense (within reason) that as many tasks as possible on contingency fee matters be shifted down to the lowest cost workers sufficient to adequately perform the task. And that those lower cost workers be encouraged to get the work done cheaper and faster. For example, an associate who would ordinarily spend hours and hours researching and writing lengthy scholarly memos would be