ABSs spell end of hourly billing

Financial constraints on clients and technological innovations such as price-comparison websites will hasten the demise of hourly billing, while the birth of alternative business structures (ABSs) will “sound the death knell”, Lord Neuberger, the Master of the Rolls, has predicted.

In a speech at the Association of Costs Lawyers conference last week, Lord Neuberger said fixed-fee arrangements were increasingly popular with both clients and lawyers.

“An approach to litigation costs based on value-pricing rather than hourly billing is one which urgently needs to be worked out and applied,” he said.

“Rather than treating time as the commodity which is being sold, we should be adopting
an approach where skill and experience are the commodities which are sold.”

One alternative to hourly billing is contingency fee agreements, as proposed by Lord Justice Jackson in his civil litigation costs review and now implemented through s 45 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, he said.

However, the rules on contingency fees must be “as simple and straightforward as possible”, to avoid a situation where “satellite litigation concerning the nature and enforceability [of contingency fee agreements] becomes as common, and detrimental, a feature of litigation” as it was in the case of conditional fee agreements.