Tuesday, February 3, 2009

New scrutiny on the billable hour


Last week the New York Times featured an article on how the down economy has forced many top law firms and their clients are reexamining the common law firm practice of billable hour. The billable hour is the focus of many young associates' waking hours, and everyone in the legal industry recognizes it is a flawed model. Not only does it make for extremely stressful working conditions when associates are expected to bill 2400 hours or more a year, it also presents a strong financial incentive to the firm that runs counter to the interests of the clients. The Times article highlights how the poor economy has forced some of the big firms to make concessions to their clients that demand cheaper fees.

None of these critiques are new. In his now-infamous ABA Journal article "The Billable Hour Must Die," Scott Turow recites many of the problems the billable hour poses to the profession. It creates tensions and suspicion between a lawyer and her client; it prevents lawyers from serving the public and underprivileged segments of society through pro bono work; it results in diminishing returns for ladder-climbing associates who have smaller and smaller chances of ever making partner.

The pressures of the billable hour are perhaps more acute for young LDS attorneys, who often hold ecclesiastical positions and have young children in addition to the significant burdens placed upon them by their employers. Everyone talks about a balanced lifestyle, but the current billable hour system virtually guarantees imbalance. I know quite a few LDS attorneys who have left private practice at large or mid-size firms and have entered the public sector. They all say the same thing -- they don't make as much money, but they are much happier. During law school I summered at a small immigration firm that mostly billed by project or by visa petition rather than by the hour. We still worked a few evenings or weekends when things were busy, but the stress level was significantly lower and the firm's financial incentives didn't conflict with those of the clients. Immigration practice might be particularly suited for that kind of billing, but I'm sure it's not the only practice that could be more effectively without the billable hour.

In "The Billable Hour Must Die," Turow cites the 1977 Supreme Court case of Bates v. Arizona (which invalidated previous prohibitions on lawyer advertising on First Amendment grounds) as the opening of the competitive floodgates in American law firms. And while I'm not completely naïve, I'd like to believe that the current economic turmoil might apply those same market forces in a positive way.

Photo credit: Darren Hester.

1 comment:

  1. Great community you have created here. Yes -- Issues regarding the billable hour have been bubbling for the past 2 decades and there has been significantly more talk than action. Finally, the economy is causing the legal community to wake up. Exemplar Law (www.exemplarlaw.com) decided that it was time to stop talking and start acting, so we have completely abandoned billable hours in favor of a fixed, value-based biling model which is great. We don't even keep track of time. It is better for our people, we all love what we do and the people we serve each day, and we still know who is productive and are profitable. It really is changing people's lives and I have never been more proud than to dedicate my professional life to something so profound.

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