© 2014 Thomson Reuters Canada Ltd.

The 2014 Canadian Lawyer Corporate Counsel Survey was released recently, and, for the first time, billable hours usage has dropped below 50% in the Canadian legal industry.

The survey found that only 47% of those surveyed relied solely on the billable hour.

But, rest assured, the billable hour isn’t dead; it’s just not exclusive anymore. More than 30% of those surveyed used a combination of billable hours and types of flat fees. That computes to 78% of respondents still relying on hourly rates.

In reality, only 22% of respondents are using alternative fee arrangements, which is comparable to the trends we’re seeing in the U.S. market.

Nevertheless, the results suggest the tipping point is drawing closer. As Peter Gutelius, Assistant General Counsel for RBC, noted, changing fee arrangements is a challenge:

We’re all still working hard to move away from [the billable hour] but it’s been around for a long time and covers a large industry and takes a while to move away from it.
— Peter Gutelius, Assistant General Counsel, RBC

Among AFAs, the survey reports the number one fee arrangements is Discount (not a true alternative, but it is a valid fee arrangement), followed by Flat Fee, Portfolio and Capped. [see Glossary for distinctions]

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