Thomson Reuters innovation event hears that clients won’t stand for it
Some of the most experienced names in legal tech agree: lawyers billing by the hour will soon be a thing of the past.
The death of the billable hour was a consistent theme at Generators, a discussion and networking event held during the Thomson Reuters annual customer summit in central London last week. With attendance limited to under-35s, select but enthusiastic groups of guests made the rounds of the room to discuss disruption and innovation in the legal sector with some of the brightest sparks in the lawtech firmament.
For all the importance of emerging technologies, clients themselves are one of the main sources of change in how law firms are having to do business. These days, one group heard from Charlotte Ballard, “clients aren’t willing to accept that they have to pay the full whack. They want the job done fast, efficiently, and with a recommendation. They’re not interested in hearing how clever the lawyer is.”
If firms can save on costs by outsourcing legal work to paralegals based in Manchester, don’t be surprised if clients get wise to it and expect some of those savings to be passed on. Ballard, the knowledge operations manager for Penningtons Manches, told grads that “clients are becoming more savvy. My personal opinion is that the hourly rate is on its way out”.
That was echoed by Alex Smith, innovation hub manager at Reed Smith (no relation). His view, too, is that it’s no longer about the hours: “actually what you need to do is think about value, not hours. Most firms now will not charge clients by hours” — his own firm does 80% of its business via alternative fee arrangements.
As Ballard points out, clients are increasingly in the market for paying an annual fee for a better service — just like other modern consumers. You and I sign up to Amazon Prime, whereas law firm clients sign a service-level agreement, but it amounts to the same principle. Smith asked:
“In 20 years time will lawyers be billing by the hour? Absolutely no way. You might still be measured by hours in terms of how productive you are, but we will be selling services with a value on them.”
The event was held towards the end of a full day’s conferencing, and staff at the Thames-side Mermaid event centre soon began circulating with drinks. Both hosts and guests batted the alcohol away — an impressive show of discipline at any legal networking event, but testament to the level of interest in the discussions. Clifford Chance will be happy that its new lawtech training contract got a mention, as did Allen & Overy’s profit-making “knowledge and automation tools”. Sadly unnamed, though, were the “clients paying their bills in Bitcoin”.
Ian Gascoigne had a particularly attentive audience, which he grilled for their views on the big legal innovations of the day with the controlled aggression of a litigation lawyer — which, until very recently, he was. The former Eversheds partner recalled remotely managing a team in Cambridge in the distant pre-email past. “When I went to Cambridge on a Monday I’d be inundated with questions. I’d tell them to phone me in London any time and they’d say, ‘oh, we don’t want to bother you’.”
Now that better technology exists to facilitate remote working, Gascoigne reckons firms won’t be paying through the nose for prime City real estate for much longer, adding: “Whatever else happens in the world, in ten years time there won’t be huge offices which everyone goes in to five days a week. It’s just too expensive in places like London and New York.”
The talk turned to alternative career paths for law graduates for those cloistered with Andy Wishart, the co-founder of Contract Express who joined Thomson Reuters along with his company in 2015. Grads in this huddle agreed that uni law degrees tend to focus only on basic legal knowledge, with little scope to explore other areas of work that lawyers might choose — so long as they have additional skills.
Wishart, who has worked in the legal market for 15 years after completing a joint degree in psychology and artificial intelligence, asked whether there should be “modules on AI or coding within law school programmes to better prepare people for the variety of roles that are out there?” Just knowing that non-lawyer jobs in law firms exist and can be a good fit would be a start — which nobody knows better than Smith.
His advice to those making their way in the legal biz is to think creatively about the work experience they rack up. Smith told attendees:
“You can go to four different law firms and learn four different things, and that’s great, but you can also find a week where you go and work in-house and watch how law is done there. Or go and work in a technical development team for a couple of weeks and just watch non-lawyers building technology. That’s invaluable commercial awareness.”
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