7. Glater, Billable Hours Giving Ground, 2009 (Price Strategy)

7. Glater, Billable Hours Giving Ground, 2009 (Price Strategy)

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Billable hours giving ground at law firms By Jonathan D. Glater January 30, 2009 Lawyers are having trouble defending the most basic yardstick of the legal business — the  billable hour. Clients have complained for years that the practice of billing for each hour worked can  encourage law firms to prolong a client's problem rather than solve it. But the rough  economic climate is making clients more demanding, leading many law firms to rethink their  business model. "This is the time to get rid of the billable hour," said Evan Chesler, presiding partner at  Cravath, Swain & Moore in New York, one of a number of large firms whose most senior  lawyers bill more than $800 an hour. "Clients are concerned about the budgets, more so than perhaps a year or two ago," he  added, with a lawyer's gift for understatement. Big law firms are worried about their budgets, too. Deals are drying up, and only the  bankruptcy business is thriving. Two top firms, Heller Ehrman and Thelen, have collapsed in  recent months. Others have laid off lawyers and staff. So cost-conscious clients may now be  able to sway long reluctant partners to accept alternatives. The evidence of a shift away from billable hours is, for now, anecdotal, as few surveys exist.  But partners at a half-dozen other big bellwether firms and lawyers at corporations, who  sometimes engage outside counsel, say they are more often seeing different pay  arrangements. Chesler, who is an advocate of the new billing practices, said that instead of paying for hours  worked, more clients are paying Cravath flat fees for handling transactions and success fees  for positive outcomes, as well as payments for meeting other benchmarks. He said that such 
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