American Bar Association / ABA, Back to the Future, Billable Hours, General Counsel, In-House Counsel

Inside Straight: Things Will Not Return To Normal After The Recession!

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Here’s a puzzle for you. What decade am I discussing in the following paragraphs?

I’m doing something a little different here. The entire text of this column appears before the jump. I’ve hidden only the citations after the jump. Ponder while you read these paragraphs when the source materials supporting these words were written:

The excessive cost of legal services is not a function of the economy that will abate as the recession finally fades. In the words of one recent report, “Don’t fool yourselves that when the recession passes things will return to normal.” That report quoted the general counsel of a major financial institution as saying, “The way we are now is the way it is now, not a temporary situation . . . . [I]n the [decade omitted] we’re going to see straight hourly billing die.”

Surveys confirm the concerns about the high cost of legal services. For example, in a [year omitted] general counsel survey conducted by [the firm you know as PriceWaterhouseCoopers], a majority of the 350 respondents agreed that “legal fees have gotten out of control and are crippling businesses,” and pressure to reduce costs was a “major theme” of the survey responses. Surveys of corporate law departments conducted by Endispute, Inc. in [two years omitted] reveal that a third of the respondents faced actual cuts in their legal budgets and that, as the size of the legal departments increased, so too did the pressure to reduce legal costs. A [year omitted] Louis Harris survey of executives and legal officers of Fortune 500 service corporations reveals cost containment as a top priority for law departments, and a survey of major corporate clients in the United Kingdom demonstrates that this is now a worldwide issue.

The pressure to move away from standard billing, based on the billable hour, is likely to increase. Indeed, [name omitted], the recently appointed general counsel of [company name omitted], is leading an intense campaign to adopt alternative billing mechanisms. Her efforts have been broadly publicized and resulted in a highly visible panel at the [year omitted] ABA meeting.

In what years did these things occur? What decade are we discussing? And who the heck was the recently appointed general counsel of what company? Those citations and more after the jump….

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The first two paragraphs above are obviously my introduction.

Both quotes in the third paragraph are taken from Requiem for Hourly Billing, Law Firm Profit Report (July 1992) at 6. It was in “the 1990’s” that “straight hourly billing” was going to “die.”

In the fourth paragraph, you can find the Coopers & Lybrand report discussed at The Pressure Is On, Corporate Counsel (Sept. 9, 1991) at S1. The Endispute surveys — conducted in 1991 and 1992 — are reflected in Surveys of Corporate Law Department Legal Cost Containment (1991 and 1992) Endispute, Inc. The Louis Harris survey is Changing Dynamics of Corporate Legal Management — Current Status and Future Directions In Major Services Corporations, Louis Harris and Associates, Inc. (April 1991). The United Kingdom study is Client Satisfaction Report, Legal Business (Feb. 1992) at 1.

In the fifth paragraph, it was Zoe Baird, then-recently appointed at Aetna, who was leading the charge against the billable hour. Baird’s crusade made her moderately famous in 1992. It wasn’t until 1993, when she was rejected as a nominee to be Attorney General for not having paid Social Security taxes on behalf of her illegal immigrant nanny, that people started talking about having a “Zoe Baird problem.” You can read about her crusade against the billable hour in Lawyers Start To Stop The Clock, Business Week (Aug. 17, 1992) at 108.

Ah, the recession of the early ’90s! It made jobs scarce. It made partnerships tricky to come by. And it was certain to kill the billable hour.

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People were so silly then. On the other hand, after our current recession ends, things will really never return to how they were. This time around, it’s different. Trust me.

[Two final notes:

First, I piggybacked much of this post from an uncitable document written in the early 1990s. I cannot credit the original author, but this post did not involve original research on my part.

Second, I’m sorry I can’t provide links to the sources from which I quoted here. I’m sure you’ll understand: The internet wasn’t much use in 1992.]

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