I Fought the Law

Slate on the Billable Hour

This article from Slate about the potential death of the law firm billable hour is creating a lot less of a hullaballoo on the legal blogs than one might expect, at least on the blogs I read. In any case, the article is yet another example of Slate's maddening tendency to oversell its articles via sensationalistic headlines.

What the article actually concludes is that, as a result of clients pushing back against hefty hourly rates and demanding more nuanced fee arrangements, the legal profession will split into "three fairly autonomous markets." Billable hours will still reign supreme in the biggest and fanciest law firms, while more mundane legal work will be outsourced to some nebulous band of technologically-enabled "consulting services" (which, though the article doesn't say this, will still probably charge by the hour, particularly if they're doing doc review). In the middle, a bunch of other law firms will be strong-armed into weird fee arrangements by their clients.

It isn't clear from the article when this trilateral schism will actually take place, or even how many law firms are offering alternative billing arrangements right now. The article says that "a quarter of companies used alternative billing last year," but that neat little statistic is kind of hard to find in the study cited in the article. What the author is probably referring to is this quote:

"Roughly one-fourth of in-house counsel are more actively managing outside counsel than the majority of their peers. Such activities include convergence, issuing competitive bids for new work, requiring minimum levels of experience of associates working on their projects, getting discounts for early payment of bills, and systematically evaluating the performance of their outside counsel."

(First, of all, that's a really dumb way to phrase the statistic. Wouldn't 49% of in-house counsel always be actively managing outside counsel more than a majority of their peers? What does that even mean?)

This may count as "alternative billing," but none of the stipulations mentioned are inconsistent with hourly billing. Placing constraints and conditions on hourly billing isn't the same as rejecting hourly billing altogether. Large law firms doing away with hourly billing would indeed be huge news. But adding flexibility to the billing process, among law firms of all sizes, is not really a big deal, and is certainly nothing new. And neither is listening to clients when determining how things will be billed. As the article points out, the billable hour was birthed in the first place in order to allow clients to get a better idea of what, exactly, they were paying their lawyers for.

One other bothersome thing about the article that bears mentioning is the opening sentence:

"It's a classic, needling lawyer's question: Spend two hours at your daughter's soccer game, or bill the time and pocket $1,400?"

Okay, that completely misrepresents how billable hours work from the attorney's perspective. Spending two hours working as opposed to spending time with your children does indeed translate into 2x whatever the attorney's hourly rate is for the firm (assuming none of it gets written off or otherwise fiddled with in the payment process). But this one-to-one correlation between hours worked and dollars received certainly doesn't happen for associates, and probably not for most partners. Unless, of course, the attorney is two hours away from some milestone that will determine the attorney's bonus/salary level for that year. But I doubt that's what the author was referring to. It's bad enough that Slate's headlines oversell its articles; it doesn't need to work sensationalism into its openers as well.

Posted by hb at January 3, 2008 08:53 AM