Has the Billable Hour Made Fools of Us?

By Irene Leonard, Lawyer Coach    

Reprinted with the permission of the King County Bar Association.

Is it time to consider the impact of the billable hour on the practice of law and make some changes? In my opinion, we need to find a more rewarding and fulfilling way to value legal services for the benefit of both lawyer and client alike. The required number of hours a lawyer must bill each year has gone up significantly in the last 30 years and there are those who believe the impact of increasing billable hour demands has made us nothing more than piece workers – something has to give for lawyers.

The profession is well known for the amount of volunteer, pro bono, law and justice reform, and bar association activities in which lawyers engage. However, with the demands of the billable hour, lawyers have reduced time to devote to the altruistic aspects of practice. Time for office camaraderie with other lawyers and staff is also suffering. Senior lawyers are less able to spend time mentoring young lawyers. What kind of lawyers are we turning out as representatives of the profession when we don't have the time to give them the help they need? The seriousness of the impact of this change remains to be seen.

The legal profession is working hard at trying to increase respect for lawyers. These efforts include a significant amount of advertising to convince the public they should respect us. Perhaps we would be better served and more likely to turn public opinion around by considering what might be at the root of this lack of esteem.

I wonder if there is any correlation between our negative image and the increased demands placed on lawyers to focus on high billable hours. I also wonder how the pressures of the billable hour are impacting our ability to remain courteous and collegial when stressed; to help those who need help just for the sake of helping. Elimination of discretionary time has taken its toll on our ability to be involved in our communities and, more importantly, our families. Where or how will this end?

How do you feel about how you charge for your services? Should the benefit of becoming more proficient/efficient in your work through the use of technology and other means be passed on to the client or should you be able to earn more because you are now more expert (and faster) at delivery of services than before? Are hours spent really a true indication of value? What are we selling? Time or skill?

The 60's were the start of the billable hour becoming the standard way in which lawyers charge for their legal services. The use of the billable hour was intended to address antitrust concerns regarding the use of bar fee schedules, to provide lawyers with a means to determine their productivity, and as a response to client requests for more detail regarding how they were charged.

Prior to the 60's the use of the one-line letter "For Professional Services rendered - $1,000" was the norm. Clients enjoy the detail and the ease of being billed by the hour. However there is a significant inherent problem for clients – there is no incentive for lawyers to work smarter rather than longer. The more hours lawyers spend, the more they make. This concept causes clients to distrust and question our bills.

It is time to make some fundamental changes in how we value our services. Just because the billable hour is easy is not a good enough reason to continue with it now that we are seeing the negative consequences. We need to find alternatives for the billable hour, alternatives that will acknowledge the increased efficiency and improved technical methods lawyers now use to deliver legal services. This does not necessarily mean the end of billable hours, but that billable hours should not be the only means of valuing legal services. The ultimate goal should be that the client receives a fair bill and the lawyer has a fulfilling, more enjoyable practice.

In 2001 the American Bar Association commissioned a report to look at the challenge of considering value over hours when determining fair payment for services. The Commission on Billable Hours Report was co-chaired by Jeffrey Liss, chief operating officer for Piper Rudnick LLP, and Anastasia Kelly, senior vice president and general counsel for Sears, Roebuck and Co. The report which was a resource I used in writing this article can be found at: www.abanet.org/careercounsel/billable.html.

Current billing alternatives include:

Many of the above are based on some form of billing by the hour. As a profession of creative, resourceful, problem solvers I trust that we can find ways to change the direction in which we have been moving, from more and more billable hours per year and the potential erosion of the high quality of the practice of law, to another more life enhancing, fulfilling way of valuing our services.

Irene Leonard, lawyer for 25 years who remembers the days of the one line bill and professional business coach. Irene works with lawyers to help them value their services.