Billable Hour Buzz – Is Change Really Coming?
As many of you already know, in a recent piece on Forbes.com, a partner at Cravath, Swaine & Moore commented that it’s time for lawyers to let go of the billable hour. The article makes mention of many of the problems with the billable hour that you’ve probably read or heard about both here and elsewhere. But coming from a BigLaw trial attorney, the exhortation to move to “a rational system that puts the incentives where they should be” may signal real change.
One of the biggest advantages solos and small firms have is their ability to be more flexible, to innovate quickly and to offer alternatives that big firms traditionally haven’t offered or couldn’t offer. Many large firm lawyers don’t have the ability to alter fee structures or provide alternative services without navigating a large firm bureaucracy and their entrenched way of doing business. Solos and smaller firms, by virtue of their size and their decisionmaking have traditionally been able to experiment more and to work more closely with clients to provide individualized solutions. But large and small firms alike have been slow to adopt billable hour alternatives, particularly in a litigation setting.
If BigLaw is willing to embrace non-hourly billing alternatives for litigation, solos and small firms will have to move quickly and think even more seriously about changing their fee structures to stay ahead of the curve.
Melody Kramer, writing for the National Association of Freelance Legal Professionals (Quality vs. Quantity – the billable hour mousetrap) reiterates the refrain of many alternative billing proponents when she says, “The amount of time spent on a project is not an accurate reflection of the end product’s value. Lawyers have forgotten that basic truth.” But she also points out the complicity of clients in the fee trap, noting that the ‘best’ law firms are often considered to be those firms with the highest profit per partner, rather than those that have demonstrated efficiency, creative thinking or legal insight.
Even the New York Times ran a piece last week about the billable hour system and the potential changes on the horizon.
As regular readers of this blog know, I am a proponent of alternative fee arrangments because I believe that the billable hour system does a disservice to both lawyers and clients. The variations on pricing are limited only by the rules of ethics and the innovation of the lawyers and clients willing to look at pricing legal services differently. As Tom Kane pointed out in a post last week entitled, Now is the Time to Consider Alternative Fees, blended contingency agreements and multi-phased fee agreements are only two such alternatives.
Interested in exploring alternatives to your fee structure? Want to know more about billing alternatives? Take a look at the posts in my Legal Fees and Billing category. If you want to discuss ways in which your firm can explore alternatives to the billable hour, feel free to contact me for a consultation.