70% of fee-earners asked ‘to discount their fees’, 63% of lawyers asked to ‘absorb disbursements’ in the past 12 months, 65% of accountants now undertaking ‘fixed fee’ client work – APS time capture and billing Survey
Announcement posted by APS 01 Oct 2010
A recent survey undertaken by legal and accounting firm software supplier APS (Advanced Professional Solutions) has found that in the past year more than 70% of legal and accounting fee-earners have been asked to discount their fees by clients, pointing to a desire from clients to control and gain certainty over professional fees. While 38% of lawyers and 33% of accountants have been asked to move to a fixed fee method of billing, the survey found a marked divergence of the two professions when it comes to absorbing disbursements – with 63% of lawyers asked by clients to absorb disbursement against just 14% of accountants, a further sign that law firm clients are looking to control costs.
Sydney-based APS Group CEO Brian Armstrong said the results showed that ‘the pressure is definitely on from clients of both lawyers and accountants when it comes to, variously, fees, disbursements and cost-containment generally. We’ve heard a great deal about this from our legal and accounting clients and it’s a strong matter of debate – this survey provides some science to that debate.’
The APS survey of more than 200 Australian firms covered a range of topics covering lawyers’ and accountants’ attitudes to time-recording and current, future and preferred billing methods and disbursements, identifying a number of similarities and differences between the two professions.
Key results are as follows:
| From a whole-of-firm perspective please identify what percentage (%) of your fees are currently billed under the following methods: (average % per firm) | | Lawyers | Accountants |
| | Fixed Fee | 15% | 22% |
| | Time based | 79% | 75% |
| | Value Billing | 12% | 17% |
For all the debate in both professions over the move to fixed fees and value billing methods, time-based billing remains the overwhelming method currently in use in both legal and accounting firms. However, when asked to forecast the likely position in five years time fixed fees increased significantly for accountants rising to almost 40% of total fees.
| Looking forward 5 years, what do you think the proportions (as a percentage %) will be for your firm as a whole | | Lawyers | Accountants |
| | Fixed Fee | 16% | 39% |
| | Time based | 66% | 54% |
| | Value Billing | 27% | 32% |
When asked what their personal preferred method of charging for work would be, there was a marked difference with both lawyers (25%) and accountants (35%) wanting to move away from time-based billing, perhaps reflecting the difficulty surrounding the accurate capture and recording of time in traditional six-minute or 15-minute units.
| From a personal perspective as a fee-earner, what single method would be your preferred method of charging for your work | | Lawyers | Accountants |
| | Fixed Fee | 32% | 30% |
| | Time based | 25% | 35% |
| | Value Billing | 43% | 35% |
However, looking at the reality of the situation, it is clear that accountants are a long way ahead of their legal counterparts in undertaking fixed fee work with 65% of accountants stating they personally charge a proportion of clients on a fixed fee basis, against 38% of lawyers.
| Do you personally undertake Fixed Fee work? | Lawyers | Accountants |
| | 38% | 65% |
Significant numbers of comments were received indicating that 6 and 15 minute time recording was often inaccurate due to human error and that available software and hardware systems should be employed to assist in the time-capture process, as reflected in the tables, below.
| Increasingly the technology is now available to allow you, by client and by matter, to capture time spent on making calls or emails on your handheld device straight into WIP while you are 'on the move'. Is this something you would like to see implemented in your firm | | Lawyers | Accountants |
| | Yes | 67% | 40% |
| | No | 0% | 26% |
| | Unsure | 33% | 33% |
When asked how accurately their own firms record time, accountants gave themselves a significantly higher score than lawyers with 84% scoring themselves more than 7 out of 10 for accuracy of capture and recording.
| At a whole-of-firm level, how accurately is time captured in your firm (on a scale of 0 to 10, where 10 is perfectly accurate) | | Lawyers | Accountants |
| | Self-score of 7 or more out of 10 | 63% | 84% |
| If you do undertake Fixed Fee work, as a general rule, are you required to record your time accurately on these projects | Lawyers | Accountants |
| | 100% | 87% |
Perhaps most telling of all, 75% of lawyers and 72% of accountants who participated in the survey have been asked to discount their fees in the past 12 months while 38% and 33% respectively being asked to move to a fixed fee, agreed upfront. However a major divergence was registered in terms of clients requests to absorb disbursements – 63% of lawyers have been asked to absorb disbursements against just 14% of accountants.
| In your team - in the past 12 months - have you been asked by a client / clients to: | | Lawyers | Accountants |
| | Discount your fees | 75% | 72% |
| | Moved to a fixed fee | 38% | 33% |
| | Absorb Disbursements | 63% | 14% |
Summing up, APS Group CEO Brian Armstrong indicated that key results of the survey confirmed what both professions have been signalling. “Our discussions with our law firm clients have shown very clearly that their clients are increasingly asking them to absorb disbursements, with accountants also being asked to discount fees or agree a fixed fee upfront – or all of the above. With this in mind it’s critical therefore that real costs and real time spent are captured accurately. Why? Because if you’ve moved to a fixed fee, accurate time capture and recording ensures you can run a clear report on the cost and profit per matter and per client. The same goes for accurate capture of all costs associated with a matter. A focus on accurate apportionment of costs and time ensures that estimates can be made with confidence - based on science rather than broad-based assumptions.”
For more information contact:
James Officer, StrategyCo
E: James.officer@strategyco.net
T: 03 83 999 500