Billable Hours

Michael Allen

Ed. note: This is the latest installment in a series of posts Lateral Link’s team of expert contributors. Michael Allen is Managing Principal at Lateral Link, focusing exclusively on partner placements with Am Law 200 clients.

The stories about Biglaw over the past five years have been grim, but a closer inspection shows that despite a cacophony of daily doomsday stories from The New Republic, the Wisconsin Law Review, The Atlantic and other publications of varying quality, the future of Biglaw looks promising.

The size of modern-day, Am Law 100 firms allows them to downsize or expand as the market conditions dictate, but as a profession of perception, firms have to handle RIFs with care. Partners and clients might go next door if they doubt the capabilities of the firm. I have worked with partners before who moved simply because the perception of their firm’s stability was questioned by their clients….

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Hop in the DeLorean and travel back in time with us.

Labor Day weekend is here. So let’s talk about… labor! In the Biglaw salt mines.

In response to our earlier Flashback Friday posts about associate compensation in the 1990s, we received a few requests for information about billable hours back then. People wanted to know how hard associates had to work back in the day for that $83,000 starting salary.

It’s a good question. You hear anecdotal evidence going in both directions. Sometimes people who have been in the profession for a long time talk about how hard they had to work before technology made things so much easier, recalling the bad old days of never-ending, hard-copy due diligence or document review. On other occasions, though, old timers reminisce about the good old ways when law was more of a profession and less of a business; sure, lawyers earned less, but they had lives — or , at least, better work-life balance.

Which picture holds more truth? Here’s some data….

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Keith Lee

It’s always interesting to have conversations with clients who have gone through multiple lawyers. Not the sort of clients who have gone lawyer shopping in the past, bouncing around looking for the lowest price, but rather the client who has had a relationship with a lawyer in the past and has decided to break away from that lawyer due to poor performance or bad customer service. Listening to clients who have severed relationships with other lawyers offers a glimpse into what is going on in the mind of clients and what they expect from the legal services they obtain.

One of the most egregious things I’ve heard lately from a client has to do with a couple of bottles of water….

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* Here’s the international sign for “don’t urinate in public.” Glad to know we needed a sign for this. [National Review]

* An illegal hostile work environment is created when coworkers wear confederate flag T-shirts. Because… obviously it is. Professor Volokh thinks this is unconstitutional. Apparently a document drafted by white slaveholders is set up to protect “broadcasting to black people that they should still be enslaved.” Because… obviously it is. [Volokh Conspiracy / Washington Post]

* Police accidentally killed a crew member for the TV show “Cops” while foiling a robbery. That’s just shocking… the fact that “Cops” is still on the air. [Associated Press via ABC News]

* Practice pointer: Get in the practice of writing non-clients to tell them that they are not, in fact, your clients. People can be crazy stalkers out there and you need to protect your practice. [What About Clients]

* Scheduling trials is like playing musical chairs. Except no matter when the music stops someone’s probably getting screwed. [Katz Justice]

* It turns out that lawyers have a hard time talking to clients about overdue bills. As a lawyer who has literally had state troopers impound a client’s private jet, I don’t understand this. But here are the results of a comprehensive survey on the subject. [Lexis-Nexis]

* If you’re interested in how the “justice gap” functions overseas, here’s a report from the Legal Services Board in the UK. [Red Brick Solutions]

* A Texas man, David Barajas, was acquitted of shooting and killing a drunk driver who had killed the man’s sons. The defense argued that Barajas didn’t kill the guy and that there was little physical evidence tying Barajas to the killing. Atlanta news (specifically WSB-TV) may not quite understand the whole “innocent until proven guilty” thing. Pic after the jump [via Twitter]:

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For months, we talked to counsel about our prospects in the case. He was sanguine:

“There’s nothing to worry about here. The plaintiff put a huge number in its prayer for relief, but you can’t possibly lose that much. Plaintiff’s liability case is thin, and the damages are inflated. You’ll probably win. If you lose, you’d lose no more than $1 million on an average day. On the worst day known to man, you can’t even theoretically lose more than $5 million. I wouldn’t offer more than a couple hundred grand to settle.”

A few months before trial, we ask counsel to put some skin in the game: “It’ll be expensive to try this case, and you feel good about our prospects. We’d like you to propose an alternative fee agreement that aligns your interests with ours. We’d like to pay you less than your ordinary hourly rates in the months leading up to trial, but we’ll give you a success fee if we win. Please think about it, and let us know if you have any ideas.”

A couple of weeks pass, as counsel discusses the case with his firm’s “senior management.” When the alternative fee proposal arrives, the goalposts have miraculously moved! In the course of just two uneventful weeks, our prospects for success have changed entirely!

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A full house for last week’s in-house counsel panel at Betterment.

Last week, Betterment and Above the Law hosted a great panel discussion about working as an in-house lawyer at a relatively young company. The event, hosted at Betterment’s spacious and airy offices in New York’s Flatiron neighborhood, drew a standing-room-only crowd of around 200 people.

How can you get a job as an in-house lawyer for a startup? And what’s life like once you’re there?

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It used to be that the world of corporate transactions was the sole province of Biglaw. After all, handling complex matters like mergers and acquisitions required manpower and overhead — and lots of it. Well-paid junior associates were an integral part of the process, and the costs of doing business were driven by corporate clients’ expectations of grandiose reception areas and white-glove treatment as proof of both commitment and excellence.

These days, however, technology has leveled the playing field, making it possible for boutique law firms to compete with Biglaw in ways never before possible. Many of these boutique firms, comprised of Biglaw lawyers seeking to practice law on their own terms, have sprung up in the wake of large-firm mergers and dissolutions. Creative thinking and the innovative use of technology have been the keys to their success, allowing these boutiques to reduce overhead costs and run their practices more effectively and efficiently, saving their clients time and money.

Don’t believe me? Well, look no further than Bailey Duquette, a Manhattan-based boutique law firm….

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Ah, the billable hour. It is the bane of many attorneys’ existence, and almost anyone who has spent time within a law firm has their own story about… ethical lapses surrounding billing. Maybe it’s something seemingly small or benign like always rounding up when tracking working time or billing through bathroom breaks (or Farmville breaks) because, hey, your brain was still thinking about the issue. Or maybe it’s billing the exact number of hours a partner believes a task should take, no matter how quickly you are actually able to charge through it.

The perverse incentives created by billing by the hour (especially when the attorneys involved have billable requirements for either their job security or their expected bonus) for legal work has been well tread, but sometimes a document review attorney has a really clever excuse….

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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]

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