Can Litigation Funding Mitigate the ‘Death of the Billable Hour?’

The legal field has not escaped the financial uncertainty plaguing the rest of the world. Even before COVID-19 changed nearly everything, firms were already lamenting the ‘death of the billable hour.’ Some might say that billable hours, while low risk to firms, are not a good model for clients—especially those of average or modest means.

Bloomberg Law details how the current financial conditions have encouraged firms to return to the billable hour. But is that tenable? Big business clients will probably expect better as the global spike in litigation continues to increase. Alternative fee agreements can be more attractive to clients, but carry higher risks for firms—leaving them to weigh the risks of sticking to billable hours versus losing big clients.

Surely there’s a way to mitigate risk while keeping clients happy? Joining forces with a litigation funder can propel firms into better litigation outcomes while improving relationships with clients large and small. It’s a proactive move that reduces financial risk while allowing practices to grow despite the current economy.

Unlike traditional lit fin where plaintiffs are provided capital to pursue a case, law firm funding works a bit differently. These funds can offer non-recourse capital to attorneys and firms, collateralized against a portfolio of cases. This is generally more affordable and timely for law firms that need money in a hurry.

According to one survey, more than 60% of law firms broadened their use of alternative funding arrangements. Over 90% of these firms reveal that they are changing their billing structure in order to gain new clients or to better accommodate existing ones.

Of course, Litigation Finance is typically reserved for those whose cases can survive careful vetting. Funders, lawyers, and plaintiffs all have a stake in the ruling—and thus a strong incentive to work together to seek a fair outcome.