The Billable Hour Remains the Legal Profession’s Pricing Standard — and Attorneys Use it to Establish Quotas

I interrupt my four-part post on how a company can achieve higher quality legal services, that are faster, more accurate — and cheaper — by “disaggregating” business challenges that raise legal issues into tasks that (often) someone other than an attorney can do better than a lawyer (“Clients Need Legal Services But Not Necessarily Lawyers”).

I saw the following in this morning’s in-box:

“Want a Market-Sized Bonus? Better be Ready to Bill Your Butt Off at this Biglaw Firm”.

For avoidance of any doubt, this meant that a large and prominent law firm issued new, formal guidelines by which it will now require the lawyers they employ (associates) to charge a quota of specified hours in order to receive a particular bonus. I don’t know if this firm previously had such a quota — though they are common in the legal profession. My point here is simply that hourly billing quotas like these are very much a part of the landscape, and that they’re widely accepted among conventional law firms — and the in-house counsel who hire them.

Regarding this law firm and its employee-lawyers, the article included a chart with two axes.

The vertical axis denoted the “level” of the associate in question. “Level” was expressed in terms of years out of law school. Nothing about demonstrated skill or competence. Just: How long had it been since this employee-lawyer graduated with their J.D.?

The horizontal axis: Increasing dollars of bonus for “1,950 billable hours …”, “2,100 …”, “2,250 …”, and “2,400 …”

Raising the question — as use of the billable hour invariably does:

Was this hour billed for the client’s good? Or for the lawyer’s good?

I always do a double take at such a headline.

Not because it’s really news to me.

But because I’m aware of the tools available to my legal profession circa 2019.

As I quoted Mark Cohen in Part 2 of my current four-part post (“Clients Need Legal Services But Not Necessarily Lawyers”):

“Law is undergoing a gradual, systemic transition from a labor-intensive, provincial-by-design, lawyer-centric ‘practice’ model to a tech and process-enabled, capitalized, global, scalable, efficient, multidisciplinary delivery model aligned with consumer needs and expectations.”

With such innovations and efficiencies on offer, I’ve never gotten my head around the fact that — alongside new tech tools, process management methods, and forward-thinking legal services providers ready to implement them — law firm billing quotas like these remain the norm in my chosen profession.

They’re a natural expression of, to use Mark Cohen’s words: “… Law’s brute force, labor-intensive, lawyer-does-all model.”

Such use of the billable hour does more than needlessly pit lawyer against client in a zero sum relationship.

And it does more than prevent clients from having pricing certainty until after the lawyers decide how long they want to take on a given task.

It’s a direct, economic disincentive to efficiency. As Stephen Poor, former chair of Seyfarth Shaw LLP — a leading international law firm — put it:

“Despite the continued argument that the billable hour is dead, the use of time as a pricing tool remains the predominant means of establishing cost … It should go without saying that a pricing structure based on volume of time supports inefficiency and, thus, is a barrier to the adoption of tools intended to drive efficiency.”