Sunday, May 5, 2013

Why the Billable Hour Endures

Over at Belly of the Beast (April 24), veteran lawyer Steven J. Harper defends his criticism of the billable hour. Here are some excerpts:

Last month, I wrote a New York Times op-ed discussing the billable hour regime and its unfortunate consequences for the legal profession. The piece generated a lot of response, most of which supported my themes. Readers generally agreed that the system rewards unproductive behavior, invites abuse, and pits attorneys’ financial self-interest against their clients’ goals.

 In fact, the billable hour system arose from a desire for greater transparency. Before it gained widespread use, clients typically received a bill that included a single line: “For services rendered.” When today’s senior partners entered the profession, firms kept track of their time but didn’t impose mandatory minimum billable hour requirements. In fact, a 1958 ABA pamphlet recommended that attorneys maintain better time records and strive to bill clients 1,300 hours a year.

Unfortunately, transparency gave way to short-term profit-maximizing behavior that distorted the billable hour into an internal law firm measure of “productivity.” Quantity of time billed became more important than the quality or effectiveness of effort expended. Today’s required annual minimum hours typically run close to 2,000 — and most associates understand that enhancing their prospects for advancement requires many more.

But in practice, few clients are well-positioned to challenge “the relationship of time, task and cost.” For a complex case, what motions should be filed and how much time should their preparation take? How many witness depositions are needed? And of what length? What’s the right level of staffing to maximize the chances for success?

Some in-house counsel possess the sophistication to provide meaningful answers to these and other questions that underlie any effort to assess the relationship of hourly fees to “time, task and cost.” But most don’t. They trust their lawyers to do the right thing under an incentive structure that pushes those lawyers in the opposite direction.

I wonder what we would find if law professors were required to report their hours of work. I think we would see a wide range of  results.

(ljs)

 

http://lawprofessors.typepad.com/legal_skills/2013/05/why-the-billable-hour-endures.html

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