The cover story of the August, 2007 ABA Journal is The Billable Hour Must Die by famed lawyer-novelist Scott Turow. No one who has read any of Mr. Turow’s books would be surprised that it is a well written and persuasive piece. He repeats a phrase I find very significant: "dollars times hours." Turow writes:
- Dollars times hours sounds like a formula for fairness. What could be more equitable than basing a fee on how long and hard a litigator worked to resolve a matter? But as a system, it’s a prison. When you are selling your time, there are only three ways to make more money—higher rates, longer hours and more leverage. As the years have gone on, the push has continued on all three fronts.
This may sound like it applies to large firm lawyers, but the math applies equally to lawyers in every size of practice who bill only by the hour. This issue may represent one of the greatest future challenges to our profession. But, of course, I’ve thought that for a few years now. Mark Robertson and I published Winning Alternatives to the Billable Hour: Strategies That Work, Second Edition through the American Bar Association in 2002. (And Mark is now waiting on me to finish my assignments for the next edition very soon.)
If I were to quibble with Mr. Turow’s piece, it would be that he, like so many, mixes together what I view as two distinct aspects of the billable hour crisis.
The first is the dollar times hours aspect. Is a mechanical formula really the best and most fair method to determine a legal fee? Is it the best for the law firm? It is the best for the client? The case against hourly billing is pretty easy to make; it can reward inefficiency and the total cost is unknown to the client until a matter is concluded. While I would not state the ethical challenges as strongly as Turow, there is the inescapable fact that, for the most part, the one who makes the decision as to whether those eight depositions are needed is the same person who makes more money from those eight depositions.
But the ethical challenges would not disappear by changing to all flat fee arrangements. If an hourly payment arrangement presents an ethical challenge to do too much, then surely a flat fee for an entire matter presents the opposite challenge to do too little. Public perceptions notwithstanding, all but a very few lawyers take their ethical responsibilities very, very seriously in all circumstances.
The second aspect of "the problem" can be said to be even more critical than the first, however. For it involves people’s lives rather than just dollars. The Billable Hour discussion is also a code phrase for the fact that too many lawyers are working themselves to death, both physically and spiritually. This lawyer may be the new associate at a major law firm struggling to ethically bill 2200 hours a year or the small town well-established solo who finds himself having to step up his work schedule when he should be enjoying the rewards of a fine career. Maybe this is caused by greater family needs, such as a child going off to college, or maybe it is caused by more time devoted to business that cannot be billed such as marketing or untangling the mysteries of e-discovery.
As Turow says in the essay, " Worst of all, however, is that when somebody is working 2,200 hours a year, he or she has less chance to pursue the professional experiences that nourish a lawyer’s soul."
I completely agree that a large part of the problem with the largest law firms is the fact that they publish earnings per partner and deem themselves winners and losers on that basis. But considering what these large firm lawyers are making, is that extra several thousand dollars worth adding the 10:00 p.m. to midnight shift an average of three days a week? Perhaps the more enlightened view someday will be factoring in average billable hours per partner and the law firm whose lawyers are all easily recognized by their children gets scored as the best.
We are living in a time of great change. We see the successful businesses. We know that they embrace the efficiencies of technology, they adapt to changing consumer needs and demands, they provide good customer service and they continue to improve and evolve. The question Turow brings us face-to-face with is how lawyers can plan for their future success in an environment where productivity improvements amount to an income reduction and a personal success story is getting a full night’s sleep or just one time seeing all of the child’s little league games that week.
If it were easy, all the smart lawyers would have already done it. But there are smart lawyers and smart clients who are using alternative billing methods. How do you start? Let me suggest modest steps. You recall the old saw "How do you eat an elephant? Answer: One Bite at a time." So litigators, are there some routine tasks that should be billed on a task completed basis rather than an hourly basis? What about filing documents with government clerks? Hourly or fixed? Consider this and revise your policies accordingly.
Read Scott Turow’s essay. Think about improving your future and serving your clients better at the same time.