Baseball Crank
Covering the Front and Back Pages of the Newspaper
January 12, 2009
LAW: Billable Hourly

The American Lawyer continues that hardy perennial of legal journalism, "the death of the billable hour is at hand!", with a look at some clients ditching hourly billing in the UK. But even the article admits that replacing the billable hour requires swimming against the tide in the UK:

In the United Kingdom, lawyers and clients have never had the same all-consuming obsession with hourly billing as their American peers. Still, over the last 20 years hourly rates have become the dominant currency here as well...

As I have argued before here and here, while it's true that lawyers and clients alike tend to despise hourly billing (albeit for different reasons), at the end of the day, (1) it persists because you can't replace it without alternatives that have serious potential problems of their own, and (2) no matter how creative lawyers may be in proposing alternative billing structures, they will only catch on if clients provide the impetus for change, which in turn will happen only if clients are comfortable that they are able to meaningfully evaluate the cost-effectiveness of lawyer services, which most clients can do with hourly bills from long experience. The vast amounts of ink spilled on this topic every year almost always fail to grapple with those basic dynamics.

Edmund Burke, the great conservative theorist, famously remarked that "[a] state without some means of change is without the means of its conservation," and that's as true in the law or any business as it is in government or culture - an attitude that all change is always bad is a very dangerous one. But the fact remains that in trying to change any entrenched practice, you have to start by asking why things are the way they are and how your proposed alternative is going to deal with those conditions. We'd all love to see the hoary old billable hour interred, but legal journalism that advocates change in the industry without grappling with those realities doesn't end up accomplishing very much for the profession of law.

Posted by Baseball Crank at 9:04 AM | Law 2009-14 | Comments (4) | TrackBack (0)

Yeah, it's not going anywhere anytime soon. Some smaller firms can get away with it for routine transactions such as wills and real estate closings, but those tend to be loss leaders anyway and usually not the fees about which clients complain.

For more sophisticated transactions and complicated lawsuits, there is simply no practical way around the billable hour.

Posted by: MVH at January 12, 2009 10:38 AM

What needs to go away is the "minimum" charge that has now become commonplace in most firms. I've worked with lawyers who charge as much as 0.5 hour minimum, no matter what they do on the file. In limited circumstances, it's fair but it usually isn't.

Posted by: per14 at January 12, 2009 11:16 AM

I loathe and detest entering my time, like most lawyers.

I similarly dislike billing.

But, I wouldn't want to be in-house counsel, a DA or a law prof, so I guess I don't have a choice about these matters

Posted by: molonlabe28 at January 12, 2009 11:42 AM

I hear is the single worst day every month the day I have to review my time entries...I thought when I went out on my own I would work on alternative strategies, but I've found that other methods (like rate cards-type stuff) is just not workable...some hearings are $25,000 hearings, and others are $500 ones, and there really isn't a way to deal with that problem by charging everyone $12,000 for a hearing.

Another complicating factor is the judiciary. Many don't factor in risk and overhead into their calculations of "reasonable and necessary" attorneys fees, largely because it has been years since they billed an hour. So you have judges ridiculing the charges, and clients hearing that in open court.

Finally, the fiduciary duty to clients related to fee disputes needs to go out the window. It's a service, like any other service, and it makes it very difficult to collect your A/R when you know you're going to be held to such a high standard that nearly everyone is guilty until proven innocent.

Posted by: AstrosFan at January 12, 2009 12:57 PM
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