According to in-house lawyer of the year Maria Polczynski, the billable hour model reached its used-by date long ago.

The head of group legal at Bendigo and Adelaide Bank and former Henry Davis York (HDY) partner said that despite being an objective way to measure something, using time as a base for billing legal work was no longer sensible. “The real issue is that we don’t want to buy time,” said Polczynski, who was named the Australian Corporate Lawyers Association (ACLA) Corporate Lawyer of the Year earlier this month.  “We don’t care if someone spends five minutes or five hours coming up with an answer, we care how much value they are creating with that answer.”

Even as a practitioner in the banking and finance practice at HDY Polczynski said she felt frustrated with the billable hour model and could see the need for leverage. “Law firms are giving advice, and are being paid to give that advice… part of the challenge is that everybody likes an objective measure, time is something you can measure and multiply by one thing and another,” she said.

When she became head of group legal Polczynski began discussions with the six panel firms the organisation uses about alternatives to the model and ways of working around the issue of value. “I have had an enormous amount of discussion with our panel firms, and we have had varied responses to that discussion,” she stated.

As an alternative to time billing, Polczynski currently has one firm working on a calibrated retainer in relation to a large piece of litigation. “Every three months we sit down with them and they tell us what needs to be done over the next three months and we tell them what we will agree to pay for that work over that period. If during the three months the project changes, then we will discuss those changes with them,” she said. “Once we do that, we don’t care how many hours or staff it takes to complete the work, because we are paying for the end result.”

There have been a couple of cases where firms have done work for the bank and agreed to cap rates. “On one occasion I offered the firm more than the cap rate, because they had done more than I expected and they had come to the table and worked with us,” said Polczynski. “I think they were surprised by that.”

Related stories:

In-house team determined to switch time billing off 31 May 2012

Corporate lawyers urged to get tougher on fixed-fees 22 March 2012