Billable Hours

During a time when demand for legal services is flat, average revenue per lawyer is down, and managing partners’ overall confidence in the market is slipping, the proper keeping of time for all of those billable hours generated by toiling associates has never been more important. For better or worse, law firms are desperately trying to incentivize associates to submit their hours on time.

As we mentioned way back in 2010, “Time keeping is more accurate when you do it every day (as opposed to trying to recreate your days at the end of the week or month). Firms are struggling to collect from their clients. And, for what it’s worth, billing hours is part of the job for attorneys.”

Another part of an attorney’s job is the ability to follow rules. One Biglaw firm just rolled out a new time entry policy, and if its associates don’t follow these rules, they can expect some pretty negative consequences when bonus season comes around…

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Exploding courthouse toilet = products liability attorney’s dream.

* Funny that SCOTUS just struck down a law imposing a 35-foot buffer zone around abortion clinics, yet it heavily enforces its own buffer zone. Some call it “supreme irony.” [WSJ Law Blog]

* Despite the slacking demand for legal services — down by 8.8 percent in terms of billable hours — members of the Am Law 100 still managed to keep their heads above water. [Am Law Daily]

* Lorin Reisner, chief of the criminal division of S.D.N.Y.’s USAO and Preet Bharara’s right-hand man on Wall Street convictions, is leaving for greener pastures at Paul Weiss. Congrats! [Reuters]

* New York State’s highest court has rejected New York City’s ban on gigantic drinks that was previously proposed by Mayor Michael Bloomberg. Go on, have yourself a nice Quadruple Big Gulp. [Bloomberg]

* When the long arm of the law flushes the toilet, it sometimes explodes, raining down jagged shards of justice. But on a more serious note, we’re happy no one was hurt at this courthouse. [Billings Gazette]

Most lawyers do not cheat.

But a few do, and they think they’re being clever.

A cheating contract lawyer reads a novel all day, codes a couple hundred documents as “non-responsive” at ten to five, and then heads home.

Cheating junior associates record a few hours that they didn’t actually work. They assuage their guilt: “I’m more efficient than other people are, so I did this more quickly than the average guy. It’s not cheating if I write down how long it should really take to do this job.” And then the cheating associates mysteriously hit their billable-hour targets for the year.

Cheating junior partners are different. Short on work but desperate to bill time, these junior partners hoard work that they should naturally pass down to associates: “I have some free time, and I’m a very talented guy. I’ll write the brief more quickly than an associate would, anyway. I’ll just do it myself, and then I won’t have to worry about being held out of the equity ranks because I haven’t worked hard enough this year.”

But how do senior partners cheat?

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If you plan to work in Biglaw, you know it’s likely you’ll be able to command a very high hourly rate. Just how high we’re talking, though, depends on the area of law in which you choose to practice.

We already knew that litigators handling bet-the-company cases collected nice fees — in some instances up to $1,500 per hour — but there are other practice groups that rake in crazy cash, too.

Keep reading to find out where you’ll be able to make the most bank in Biglaw…

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Image via The Billable Hour Co. If you’d like one of these for your own, check them out here.

I was instructed to take voluminous fax documents from boards, count the pages, estimate how long it would take him to read had he done so, and charge a pro-rata share of $375 an hour, which greatly increased his revenue. He billed my time at $150 an hour while he paid me only $15 an hour. This and other shenanigans artificially pumped up his billing from $150,000 to well over $395,000 for one [homeowner association] case, made up of nonexistent time he claimed he spent researching the client’s case.

– Anonymous law clerk who wrote the Los Angeles Times to ask if he should report his boss’s shady billing practices. The boss also fittingly makes a point of billing clients for the time they exhaust complaining to him about his bills.

This is not a column about getting bloated Biglaw partners into running shape, as much as many of them need the exercise. Instead, let’s focus on another 10K milestone, one that Biglaw associates chase after, spurred on by a number of incentives, ranging from a simple desire to keep their hard-earned jobs to the burning ambition necessary to even aim for partnership: reaching 10,000 billable hours.

In the popular conception, 10,000 hours of practice at any skill is a critical hurdle to achieving mastery. It does not work that way for lawyers, especially those that start out in Biglaw.

As anyone who has started their career in Biglaw knows, the early years are more about survival than anything else. The most critical skill is adaptability, both in terms of being able to handle the lifestyle stresses presented by the Biglaw junior associate experience, and recognizing just how little law school has prepared one for Biglaw legal practice. In fact, I would say that for purposes of tracking personal progress towards the 10K mark, the first year of Biglaw practice (and maybe two or three depending on whether one is in a firm that “rotates” their juniors to expose them to different practices areas) should be thrown out. Consider that time as the foundation that allows for future productive lawyering if it makes you feel better. And first-years would do well to disabuse themselves of the notion that they will be “contributing” or doing “quality” work. Obviously they need to do their best, and perform up to Biglaw standards, but the hard truth is that the first-year in Biglaw is there to force high-flying and well-credentialed aspiring lawyers to humbly confront two uncomfortable questions. First, do you even want to be doing this? And second, even if you want to, are you good enough?

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These days, fixed fees (also known as flat fees) are all the rage in the legal profession. Long employed by solos and smalls for practice areas as diverse as estate planning, business incorporation, trademarks, bankruptcy, and criminal defense, today, flat fees are gaining traction  even with the big boys at Biglaw.

While the benefits of flat-fee billing, including cost certainty, increased efficiency, and administrative simplicity are well documented, there’s not much guidance on how lawyers can implement fixed fees in practice. As a result, many lawyers shy away from fixed-fee billing, fearing that if they charge too little, they’ll be stuck working for free if the case winds up taking more time to resolve than originally anticipated.  Meanwhile, many lawyers who experiment with fixed-fee billing claim that it doesn’t work — largely because they haven’t implemented it in a way that benefits the lawyer as well as the client.

So below are a half-dozen tips to help solo and small-firm lawyers implement fixed-fee billing without paying the price. Though not exhaustive, these suggestions may help lawyers currently contemplating fixed-fee billing get started, or convince those who’ve tried flat fees unsuccessfully to reconsider…

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Christina Gagnier

If you are a solo or small firm who is looking to work with startup companies, you have probably been asked to take equity in lieu of compensation or to set up a deferred payment plan. When you are talking to companies who sound like they may be doing the next big thing, you may believe you are taking an educated gamble.

Yet, when you turn to the economics of being a solo or small firm, the numbers often do not pan out…

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An angry God is one without a line of credit.

* “[T]he one thing Windsor does not do is clearly establish a nationalized definition of marriage.” No one will be surprised when the same-sex marriage cases wind up before the Supreme Court. [National Law Journal]

* Law firm mergers continue to hum along at a record pace, but whether they’ll actually work out is another question entirely. Only time will tell if we’ll see another “spectacular flameout.” [Wall Street Journal (sub. req.)]

* “The billable hour’s day has passed.” Eighty percent of law firm leaders believe hourly billing may soon be going the way of the dodo in favor of alternative billing arrangements. [Capital Business / Washington Post]

* Despite its anti-gay policies, Trinity Western University Law has been granted approval from the Law Society of British Columbia to open its doors. And here we thought Canadians were supposed to be polite. [GlobalPost]

* If you want to take an “Law and _____” class, sign up for Law and Traumatic Brain Injuries at GW Law. Having a TBI yourself seems like a requirement for enrollment, but shockingly, it’s not. [New York Times]

* Times are so rough that God can’t even get a credit card. Instead of casting plagues upon the earth, he’s suing Equifax — though we’re sure he wouldn’t mind if the credit agency reps caught lice. [New York Post]

As we noted in Morning Docket, there’s a new survey out about corporate America’s legal spending in 2013. As noted by Am Law Daily, the LegalView Index “is based on actual dollars paid by clients, not on surveys of law firms” — so perhaps it’s more reliable than many of the other studies.

What does the survey say? Here are some highlights:

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