Sunday, August 16, 2009

Law firms court clients with flat fees

When Gaylord Entertainment Co. needed a law firm to help prepare and file a document with the Securities and Exchange Commission, the hotel company's executives arranged to pay a flat fee for the work — rather than a law firm's hourly rate.
That gambit saved Nashville-based Gaylord as much as 20 percent on the project, said Carter Todd, Gaylord's general counsel.

In the current recession, companies are demanding more flexibility and certainty in legal fees in a bid to control costs. That's putting pressure on law firms — and coaxing many to offer discounts or alternatives to rates that can reach $1,000 an hour in some big legal markets, such as New York City, where Nashville companies sometimes hire legal talent for particular projects.

Cost-conscious companies such as Gaylord, a hotel chain and owner of the Grand Ole Opry , also are offering more work to regional and local law firms — including the ones in Nashville where hourly rates are easily half of the fees charged by big national law firms.

"We've been able to get good value right here because of quality of the Nashville bar," said Todd, who received help from Bass, Berry & Sims attorney Mitch Walker in preparing a registration statement to allow Gaylord to issue new securities.

Traditionally, lawyers have billed clients at an hourly rate that's often determined by the attorney's experience and the going rate in the market. That rate is multiplied by time spent on the matter. Clients typically get an itemized bill for services performed.

Some legal experts say that though creativity in pricing should continue, talk about the death of the billable hour is greatly exaggerated.

"It tells them something about what work was done and what they're getting for their money," said Keith Simmons, Bass Berry's managing partner, about why some general counsels and clients prefer billable hours even amid cost-cutting urgency.

In cases involving litigation, it can be more difficult to charge a flat rate because of how complex a case might be and uncertainty over how many depositions might be needed or how the opposing side will pursue its case.

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