Which Biglaw Firm Just Got Rid Of Billable Hours?

What will replace the billable-hour requirement at this large law firm?

For many Biglaw associates, the billable hour is their mortal enemy. It’s what keeps them from spending time with their family, friends, and loved ones. If they don’t meet their yearly requirements, it’ll be what keeps them from being able to put more money in their pockets come bonus time (which should be right around the corner).

Some Biglaw firms, however, have gotten wise to the fact that clients are no longer willing to pay by the hour for legal services. Does this mean the torture that is the billable hour is going to die?

That’s exactly what’s happening at one firm come 2015…

Here’s a report on the exciting news for associates from Nathalie Pierrepont of the Am Law Daily:

Jackson Lewis says it wants to take the next step in the evolutionary process of alternative fee arrangements by eliminating the billable hour as an evaluative tool for its 293 associates. As of Jan. 1, associates at the labor and employment firm will be assessed on efficiency, client service, responsiveness, team-orientation and pro-bono commitment in an effort to align the way Jackson Lewis “deliver[s] legal services with clients’ needs,” according to firm chair Vincent Cino. (The firm’s compensation model for partners is based on revenue rather than hours.)

“The billable hour is directly opposed to the best interest of the client and to the provider of service because by its very nature it adds an artificial barrier to the accomplishment of the only real objective, which is a quality legal product for a set and expected price,” Cino says.

Previously, Jackson Lewis associates were required to bill 1,900 hours per year in order to become bonus eligible, but now, the focus will be based on more subjective factors. The only financial metric that will matter once this new system is implemented will be “true billed value” — which likely means receipts.

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Thomas Clay, a consultant from Altman Weil, says most firms have shifted their compensation systems to focus on fee receipts, rather than billable hours in the last 15 years.

“When they look at productivity, do they look at hours? Yes,” Clay says. “But if you can’t get the fee receipts in the door, do you get less credit for your hours? Yes. In the end, you can’t spend hours at the acme—you can only spend cash.”

Is that going to be better or worse than a billable-hour requirement? For starters, even Cravath’s chair, Evan Chesler, has said that the billable hour should be taken out back and put out of its misery, as it “makes no sense, not even for lawyers.” At the very least, this will serve as a morale booster for associates.

Though this may be a “better the devil you know than the devil you don’t” situation, we think that in the end, Jackson Lewis associates will be much happier without the terror instilled by the thought of not meeting their billable-hour requirements constantly lurking in the darkest shadows of their minds.

Jackson Lewis to Eliminate Billable Hours for Associates [Am Law Daily]

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