"Mayer Brown's senior management is in the process of reviewing how the firm bills clients and is considering proposals to overhaul fee structures for core transactional practices including corporate, banking and real estate.
The proposed changes, which the firm said have been accelerated as a result of client demand for greater certainty during the downturn, would see Mayer Brown offering fixed fees for all transactional work, as well as more regularly using abort agreements and success fees.
Sure, this is an important development simply because it signals the readiness of two of the larger global firms to reassess historically entrenched billing practices.Separately, Reed Smith has also been looking at changing fee structures within its transactional practices. The firm has a committee made up of partners from across the firm reviewing proposals and is looking at an increasing use of fixed or capped fees for clients within its financial industry group (FIG), corporate and real estate practices, for transactional work."
But, actually, the implications are even more profound. This development is more than a possible trend in cost structures and more than a comment on difficult economic times.
Fixed pricing for transactional work, by definition, encourages the unbundling of legal services. The act of articulating an a la cart menu of legal services is, in itself, a form of unbundling.
Transactional pricing isolates the tasks being performed and separates them from other services. And that is inherently different than the traditional business model of a firm offering a stew of services, all intertwined, and all covered by the umbrella of billable hours.
As we quoted Robert J. Ambrogi back in April:
"Legal services are evolving from a highly bespoke, highly customized product toward becoming a commodity. As part of this evolution, legal work will be unbundled into its constituent tasks and many of those tasks will be standardized and systematized."
Another brick in the wall.