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by Vault Law Editors | October 24, 2007

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Law is unique: in no other profession, with the possible exception of the world’s oldest, does one get paid more for taking more time to perform a task. 

 

The billable hours system: it's hard to imagine an institution so entrenched and powerful and yet bereft of even apologists, not to even speak of defenders or advocates.  Kim Jong-il, the New England Patriots, the metric system—even these villains have outspoken fans.  Not so for the monetized six-minute increment.  

 

The crux of Scott Turow’s widely discussed piece The Billable Hour Must Die is that the system is almost certainly inherently unethical ("I have been unable to figure out how our accepted concepts of conflict of interest can possibly accommodate a system in which the lawyer’s economic interests and the client’s are so diametrically opposed.")  Moreover, Turow laments all the attendant unpleasantness that the increasing primacy of  billables brings.  (e.g., “Fee collecting process has grown far more fractious.  There are now law firms that specialize in disputing other firms’ bills—and in-house nudniks who demand copious details and flyspeck them.”)  Ann Althouse also has strong feelings on the subject: "How hateful to be embedded in a system that rewards inefficiency."

 

It didn’t have to be this way.  As recently as 50 years ago, hourly billing was uncommon.  Niki Kuckes, who, like Ann Althouse, left BigLaw for academia, wrote a terrific potted history of the billable hour for Legal Affairs.  Kuckes accounts for the rise of the billable hours thus:

 

The answer begins with the corporatization of law practice.  As law firms expand or merge, they must search for measures to predict income, expenses, and budget.  Billable hours present a ready standard because they can easily be measured, compared, and reduced to "realization rates" (which compare hours worked with the fees collected on those hours).  They can be translated into precise expectations that can be used to guide lawyers' performance.  It's no wonder, then, that attorneys complain of feeling like piecemeal workers in a factory.

 

Some brave firms are tilting at the status quo.  Shepherd Law Group, a Boston employment boutique, has abandoned the billable system.  “Hourly billing is wrong and anti-client,” says firm founder Jay ShepherdAnother labor & employment firm, Ford & Harrison, has decided to get rid of billable hour requirements altogether for first-year associates.  As the firm’s managing partner, the awesomely named Lash Harrison says, "Everyone sits around and complains about the problems.  I figured, what the heck, maybe we can try something."  Good luck Lash!

 

                 - posted by brian

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