“The Billable Hour Must Die”
Such was the rallying cry issued by Scott Turow last year in the ABA Journal. Over the past few years, there’s been a rumbling in the legal profession about the death of the billable hour. Two weeks ago in Forbes, an attorney wrote a piece titled, of course, “Kill the Billable Hour.” He was refreshingly candid in the article. The criticisms against billable hours are always the same: it creates a conflict between the client and lawyer due to the incentive for lawyers to protract litigation, clients lacks the knowledge to evaluate the billing entries, there’s no correlation between cost and quality, it places immense pressure on lawyers and law firms to bill constantly to collect dollars, etc, etc.
In the article, the author wrote
In truth, most of the lawyers I know don’t like the billable hour either. For one thing, it is a subject of debate with clients. Because it’s the most tangible metric they have of their lawyer’s efforts, clients spend a lot of time analyzing, evaluating and even auditing it. Those efforts remind me of the old joke about the guy who looked for his missing keys under the street lamp, even though he dropped them across the street, because the light was better under the lamp.
I’ve been on both sides of this issue. I’ve billed time and I’ve audited time and I agree with the skeptics of the billable hour. WIth the econony taking a nose dive, there’s increased pressure for lawyers to cut fixed costs and provide quality service at lower prices. The days of $250 per hour associates is long gone. I believe there’s room in the profession for small firms to innovate and run with value billing. They can operate with lower fixed costs, drop their hourly rates, and value bill. It would offer clients a much more predictable experience and do wonders for the reputation of lawyers in America.
January 12th, 2009 at 7:10 pm
Agreed. Other major goals of change should be faster court decisions. We seem to have forgotten about the concept of “justice delayed is justice denied.” These changes will probably result in less lawyers, as the competent ones will stay, the ones who can only drag things along will be gone. However, the new administration will probably take us further in the other direction.
January 12th, 2009 at 7:13 pm
Very valid points. we use a structure of billings with our clients that i thin lawyers could learn a lot from.
January 13th, 2009 at 10:05 am
I agree, Tex. The legal profession is saturated.
February 11th, 2009 at 3:30 pm
Do you think there is a risk that reducing hourly rates (where they are still used) would lead clients to devalue the work done on the basis that it is being done for less? Clients still seem to value work more highly when it costs an arm and a leg.
February 12th, 2009 at 11:43 am
Paul, you’re right. There’s a balance between appearing too “cheap” and costing too much. Seth Godin always preaches about charging a premium and marketing the value like crazy. However, I just think the market can no longer bear high fees. So on the one hand, it might appear that lawyers are offering their services for “cheap.” But on the other hand, those lawyers might just be ahead of the curve.