Biglaw, Money

Whither the Billable Hour?

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Over the break, a reader sent us this article, accompanied by a quip: “Looks like BigLaw is funding some new research.”
Our first reaction: A brain chemical you snort to replace sleep? It’s called “cocaine.”
But today we have a second reaction: Would such research, if funded by Biglaw, be a waste of time? Law firm associates — and partners — sacrifice sleep to rack up billable hours. But is the billable hour on the way out?
Over at Slate, in a piece entitled “How to Kill the Billable Hour,” Lisa Lerer writes:

[C]riticisms [of the billable hour] lobbed by academics, associates, and bloggers have had a negligible impact. Making such a significant change takes a more powerful force in law firm life: the client. And now, finally, the companies that pay millions in hourly rates are striking back, forcing their law firms to cut some tough, nonhourly fee deals. If anyone can tame the billable beast, it’s the clients who feed it….

Cisco, Pitney Bowes, Caterpillar, and several other large corporations have begun to force their law firms into alternative billing arrangements. The companies push flat fees and volume-based discounts, and ban young associates from working on their business, hoping to avoid paying through the nose for work that could be done more cheaply by paralegals or temp lawyers. They say that by eradicating or at least limiting hourly rates, they avoid cost creep, cut their bills, and better predict their expenses.

Writes an ATL reader who works at a prominent New York law firm: “Great. Now it won’t matter that I bill 2500 hours a year.”
A little more, on the other side of the rainbow.


Okay, let’s not get ahead of ourselves. People have been predicting the demise of the billable hour for years now, but it’s still the leading method for charging for legal services.
And our friend at one of New York’s top shops will probably still have to monitor his hours, even if the billable hour becomes less popular in other precincts. Lerer notes:

[T]he business [of law firm legal practice] will eventually spilt into three fairly autonomous markets. The top end of the spectrum will remain largely unchanged. Companies will still pay hourly rates to hire white-shoe law firms for specialized, bet-your-company kinds of work. On the opposite end, however, clients will stop taking their rote legal work to law firms altogether. Companies already outsource relatively simple matters like document review to consulting services. And as technology improves, more programs will let companies handle their own contracts online.

In the murky middle between one-of-a-kind advice and dime-a-dozen contracts, the push for alternative arrangements will prevail.

Thoughts? Are we starting to see serious movement away from the billable hour? Or is the billable hour the Biglaw equivalent of Freddy Krueger?
The Scourge of the Billable Hour [Slate]
Snorting a Brain Chemical Could Replace Sleep [Wired]

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