Thursday, January 24, 2008

Death of the billable hour, part n+1

In this morning's NYT, Lisa Belkin's article, Who's Cuddly Now? Law Firms, caught my eye. As I've predicted (see here for an example), law firms are starting to move away from billable hours to more client-friendly, lawyer-friendly forms of fees. She points out that clients "reacting to spiraling legal costs, have begun insisting on flat-fee deals." She also notes that the newest generation of lawyers wants a more balanced life.

This is, to quote every parody of Martha Stewart ever done, a Good Thing: billable hours tempt fraudulent behavior (a one-minute phone call as a 15-minute increment of a fee?), punish the efficient lawyer, and grind inexorably on the quality of life of lawyers who do want to take time to do their jobs well. With alternative methods of billing, big-firm lawyers can concentrate on the professional side of their lives, in much the same way that their smaller-firm and contingency fee colleagues have been doing for decades.

By the way, thanks to Gil Grantmore for fixing the formatting of this post.

4 comments:

Anonymous said...

Clients don't want to pay, and lawyers don't want to work. But hey, they can't all be lazy law school professors...

Doug Richmond said...

As someone who practiced law for nearly 20 years, I am convinced that billable hours do not punish efficient lawyers and do not erode quality of life. I billed by the hour and I billed lots of hours even though I was efficient. Why? Clients valued my services and kept me busy. The fact that I billed hourly did not encourage me to churn files, etc., because I did not need to. As for the qaulity of life mantra, I know many very successful plaintiffs' lawyers who are compensated by way of contingent fees who work exceptionally hard. They put in very long hours, even if they do not track them or bill them. Their quality of life is better only in that they may make more money (some plaintiffs' lawyers do handsomely, others scrape by) than many defense or transactional lawyers. Long story short, it is time to stop the billable hour whine.

Tim Hadley said...

From a quality of life perspective, I have two problems with the billable hour, only one of which might be inherent in the practice of time-billing. That possibly-inherent problem is the habits involved in tracking and billing time can lead to habits of thinking in which "each minute spent doing something else besides billing the client was a wasted moment." That's a partial quote of something attorney Enrico Schaefer wrote - his complete sentence reads, "To live your life as though each minute spent doing something else besides billing the client was a wasted moment is a waste of life."

My other gripe with the billable hour is that the number of them one is expected to bill seems to keep increasing, and the performance of billable work is not the only expectation or requirement that falls on a lawyer. I won't have had a fulfilling life if its main features turn out to be client work and business development, even with some pro bono included.

I think the incentives to churn files and outright lie are probably overstated, but I also think churn and fraud do happen. And as for that phone call, I've only ever billed on the six-minute increment, and I don't usually charge for anything that takes less than four or five minutes. However, I think there is some validity to the proposition that value pricing or hybrid price arrangements would better align the interests of clients and lawyers by giving the lawyers incentive to choose their strategies more carefully instead of trying every approach (and filing every motion) possible.

Nancy Rapoport said...

I sure appreciate y'all weighing in on this issue--thanks!