While the half year results of listed companies appear to be reasonably positive thus far, one thing that has not changed for in-house lawyers is the need to control external spend. Representatives for in-house industry groups such as ACLA and CLANZ have told ALB that their members continue to express a strong interest in alternative billing solutions.

Helen Conway, general counsel for Caltex Australia, says the challenge is for companies to develop specific proposals for alternative billing and push ahead in a determined fashion.  However, she also concedes that this carries a risk that law firms - particularly the larger ones - will simply not accept the proposals. “This means companies may have to go with other firms which don't have the recognised expertise, capability or capacity. This is less risky in the case of work which is not strategically or operationally critical to the company. Clearly, it is necessary to segment the legal work to be outsourced before structuring fee arrangements,” she told ALB.

ACLA CEO Peter Turner says that firms are increasingly willing to take on more of the risk or to bill on a project management basis. However, some firms have expressed frustration with the alternative billing push. “We’ve done countless proposals on an alternative basis, such as a certain fee for a successful completion and another fee if the transaction doesn’t happen  – but nine times out of ten they get rejected,” one partner told ALB off the record. “The reason is simple – every client thinks their transaction will get up. They don’t want to pay a premium for something they’re expecting will happen anyway.”

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