Lawyers

GlaxoSmithKline Says No to Billable Hours
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

11548561h1296595-750xx4000-2250-0-182

Summary: Is GlaxoSmithKline ushering in an era of alternative fee arrangements?

It turns out eradicating billable hours was not a hard pill to swallow. British pharmaceutical company GlaxoSmithKline has been requesting law firms no longer bill them by the hour, and it appears as if their wish has been granted. In 2015, 84 percent of legal work done for the multi-billion dollar company was performed under an alternative fee arrangement (AFA). This is a huge jump from 2008 when 97% of GSK law firm work was completed using the traditional billable hours model, according to Law.com.

  
What
Where


GSK’s campaign to end hourly billing was credited to the company’s general counsel Dan Troy. After arriving from Sidley Austin in 2008, he advocated GSK to seek legal representation using AFAs. According to GSK associate general counsel Bob Harchut, “The mission was to dramatically change the paradigm by which GSK paid for legal services. It was pretty radical to say we’re going to move every new engagement around the world, whenever feasible, to an alternative fee arrangement.”

Despite Harcut’s initial skepticism, he told Law.com that Troy insisted that AFAs would be a win-win for GSK and the law firms they worked with. So far, law firms view the change as positive, according to Harchut. He said the biggest challenge for everyone involved is ensuring GSK negotiates the fairest flat rate up front.

“How can we make sure we aren’t over or underpaying for value … that has been our Holy Grail,” Harchut said.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




Busines of Law said that GSK’s high percentage of work performed using an AFA was “impressive.” In 2015, AFAs were only used in 9.4 percent of all legal matters, according to the Enterprise Legal Management Trends Report.

While GSK’s almost entire annihilation of billable hours is rare, it comes during a time when some experts are advocating that kind of change within the legal community. Because law firms operate by the billable hour structure, associates are expected to bill 2,000 to 2,500 hours a year. This leaves attorneys unhappy, unhealthy and burnt out, and it is said that this business model is a leading factor as to why women eventually phase out of the profession.



Harrison Barnes of BCG Attorney Search has advocated for more law firms to modify their current 60 hour work weeks to fit young attorneys’ values.

“Changing demographics in the United States over the last several decades have created a need for alternatives within the practice of law. Responsibility for the care of children and elderly parents has mandated that women create flexible arrangements; men also have either assumed or been forced to take on such responsibilities,” Barnes said. “Societal values have also changed immensely over the last few decades, contributing to the need for change within the practice of law. Concerns about health, fitness, and quality of life have made us into a nation of emerging “life-stylers”-people with interests beyond the immediate demands of our profession. Psychological testing and self-awareness tools also have enabled individuals to determine their own talents and needs, and they are acting on this information by creating or seeking work arrangements suited specifically to their personal situations.”

Photo courtesy of Bloomberg Finance

Do you think law firms should do away with billable hours? Let us know in the comments below.



 

Interesting Legal Sites You May Like


BCG FEATURED JOB

Locations:

Keyword:



Search Now

Mid-level Litigation Attorney

USA-CA-San Francisco

San Francisco office is seeking a mid-level litigation attorney with experience taking/defending dep...

Apply Now

Trust and Estate Attorney

USA-NY-New York City

Boutique trust and estate firm is seeking an attorney with 7+ years of experience. Candidate should ...

Apply Now

Mid-level Litigation Attorney

USA-CA-San Francisco

San Francisco office is seeking a support attorney with some experience/familiarity with a litigatio...

Apply Now

In House Counsel with Transactional Energy Experience

USA-NY-New York City

New York City company is seeking an in house counsel with knowledge of the oil / energy industry. Ca...

Apply Now

RELEVANT JOBS

Litigation Attorney

USA-CA-San Francisco

LEXINSIGHT LITIGATION ATTORNEY San Francisco, CA   Trained by top legal recruiters...

Apply now

Litigation Attorney

USA-CA-Los Angeles

LEXINSIGHT LITIGATION ATTORNEY Los Angeles, CA   Trained by top legal recruiters a...

Apply now

Litigation Attorney

USA-IL-Chicago

LEXINSIGHT LITIGATION ATTORNEY Chicago, IL    Trained by top legal recruiters...

Apply now

Litigation Attorney

USA-DC-Washington

LEXINSIGHT LITIGATION ATTORNEY Washington DC Trained by top legal recruiters and talent, L...

Apply now

SEARCH IN ARCHIVE

To Top