The rise of fixed fee transactions in the legal sector
Where the billable hour once reigned supreme, a shift in client demands resulting from a challenging economic climate has forced a surge in popularity of fixed fee arrangements in the legal industry. According to the Legal Services Consumer Panel Tracker Survey 2017 – fixed fee arrangements now account for 48% of transactions in the legal industry, with a marked increase in conveyancers using this charging method over the last year.
But is it any surprise? Facing an unstable economic landscape and mounting pressure to improve efficiencies, organisations in both the public and private sector have been forced to slash their budgets and justify every penny spent. Legal consumers of today are warier than ever of instructing law firms when the cost is not clear from the outset, citing unpredictability and lack of transparency in their reasons for seeking alternative pricing models from competitive newcomers or industry innovators.
Where legal costs were once shrouded in mystery, consumers are increasingly able to compare prices from legal services providers, especially since the SRA now encourages firms to publish pricing information on their websites. It’s a move that is long overdue, but the rise in fixed fee arrangements does not necessarily imply the death of the billable hour. In certain instances, this traditional charging model may be a better option depending on the specific circumstances. To best assist their clients and provide a flexible service, law firms of the future should seek to offer a range of pricing options to reflect the ever-changing needs of modern businesses.
“Fixed fees give consumers a clear idea of what a service is likely to cost, and enables them to compare prices to make an informed decision. It is also an indicator of improved competition in the market.”
Legal Services Consumer Panel Tracker Survey 2017
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