A New Year - A New Look at the Billable Hour

Happy 2008! I've been a bit lax in posting over the past several weeks, but I've resolved to be more consistent in 2008.

Many thanks to Susan Cartier Liebel of Build a Solo Practice, LLC for giving my first post a head start with her post The Billable Hour Bash-A-Thon Continues Courtesy of Slate. Susan's post is a continuation of her discussion of the fall of the billable hour that was started in her other posts, The Cockroach of the Profession - the Billable Hour and The Billable Hour Cockroach is Being Extinguished. I won't reiterate Susan's posts here, but I urge you to read the posts and the comments and join in the discussion. I've commented on her most recent post (at Susan's invitation), in part because so many lawyers - particularly those in litigation - rail against any alternative to the billable hour. I think that's good, because it presents an opportunity for discussion, and because I believe that many of those lawyers are longing for a way to rid themselves of the billable hour model but just don't know how to go about doing it.

For an overview of value billing, see my series of posts on Grant Griffiths' Home Office Lawyer blog: Value Billing, What Is It and How Is It Done? Parts I (what is value billing, setting expectations and establishing value), II (determining the fee and using options and change orders), and III (guarantees, business practices and overview).

Billing alternatives got a 'boost' toward the end of last year with an article by lawyer-author Scott Turow in the ABA Journal, The Billable Hour Must Die, which prompted much discussion, both on and offline, among lawyers. But many are still reluctant to give change a chance. One reason is that they're just used to it. Change is always difficult, and it requirese re-thinking what lawyers do on a daily basis. And lawyers think clients won't accept a change, or have encountered clients who seem resistant to the change as well. Why? Because clients, just like lawyers, are used to the idea of hourly fees.

But some lawyers have been inspired to change or modify their fee structures as a result of the recent discussions, and I hope more will give alternative fees a chance in 2008. Those lawyers that have explored the change (whether they've implemented it or not) have more than likely engaged in a fair bit of discussion about alternative fees, have done their homework and read about the alternatives both on and offline, and have spent time determining how and why they will change their fee structure. If you've had to do research to convince yourself that a change to alternative billing is appropriate, you have to remember to educate your clients about those changes as well.

Family lawyer Sam Hasler of Indiana talks about the recent changes he's made to his fee structure on his blog, Sam Hasler's Indiana Divorce and Family Law Blog. In a post entitled, "Where I Want to Go With Flat Fees," he details his process for setting fees. He makes this notation at the end of his post:

I think this is the first time I ever expressly detailed how I set my fees. I suggest the next time you are seeking a lawyer, calling up and asking about fees that you remember this article of mine. Ask them how they bill for their services – hourly or flat fee. Ask how they determine their fees. Ask for their estimate of the total amount of fees for the case. Ask how they reached their estimate. Do not be put off with lawyers who say it depends on the facts. You will find the more complex a case the less concrete will be the estimate.

Sam makes a good point - lawyers must spend time talking to clients about their fees, about what those fees mean to the client, and about the benefits the lawyer provides to the client both in terms of the services the lawyer provides and the way in which the fees are structured.

One of Sam's earlier posts, simply entitled, Flat Fees, provides a good round-up of posts on alternative and value billing, while noting again that clients need education about billing alternatives.