Biglaw

Should There Be A Requiem For The Billable Hour?

It’s up to us to figure out how best to provide legal services so that clients feel that they are getting value for what they pay.

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I’ve been thinking a lot about the billable hour and how some people are trying to drive a stake through its heart, while others champion the continued use of the billable hour from now until whenever. When I was in private practice, I hated having to keep written time sheets (in dinosaur days) and now there are better, smarter ways to capture time.

Not having to keep time is a real sales clincher for going in-house, at least it was for me.  I know, I know, some corporate legal departments keep time records, but we never did. Since we didn’t, clients were never fearful of being billed for time spent talking with an in-house attorney.  Preventive law at its best.

When in-house, I hated having to review bills from outside counsel, as there was always some issue with the bills, spending too much time on something of little or no value, not alerting the client (me) in advance about unforeseen (and unbudgeted) time spent. I know that my friends in Biglaw and elsewhere hate being evaluated on hours billed and collected, rather than the value provided to a client.

What if the billable hour went the way of the dinosaur? Dinosaur lawyers are not dead yet, but we’re closer to the end than to the beginning. What if the legal work was appraised not for the hours billed and collected, but for the value added, the value to the client for the results, client service, and other markers? Should there be a requiem for the billable hour?  Maybe not right now, but perhaps sooner than we think.

University of California Berkeley professor of management, Morten Hansen, has written a book, “Great at Work: How Top Performers Do Less, Work Better, and Achieve More,”

which indirectly challenges our absorption with the billable hour and our refusal to let it go.

(Full disclosure: I have not read the book yet, but I did read Hansen’s lengthy essay in a recent issue of the Wall Street Journal, which sets forth some of his ideas that I think we should consider.)

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Hansen says that it’s not simply a matter of talent or hard work (i.e., hours worked). It’s more than that. Top performers have mastered the art of selectivity, in other words, they can’t do everything and they don’t even try. They do less, but they apply intense, targeted effort on whatever their priorities are in order to excel. Hard work is not always the praiseworthy endeavor that people think it is. Working smarter is better.

That’s the first characteristic of top performers that Hansen found. The second? This is not going to be the easiest thing to do: “say no to your bosses.”  Uh-oh. Talk about awkward. What junior puppy can screw up the courage to say no to the senior associate, partner, or whoever is higher up on the lawyer food chain?  A “career limiting move” or even a “career ending move,” at least at that job? Your guess is as good as mine.

Hansen says that acknowledging that how one says “no” to a boss can make all the difference; it’s a matter of gentle pushback. Discuss with the boss what you have to do and ask the boss how s/he wants to reprioritize your workload.  In other words, put the decision back on the boss; it’s who you’re working for and that person should be able to articulate, even if inartfully, what’s most important to get done and the timetable. You can’t do it all, and you shouldn’t even try, says Hansen. Besides, it’s good practice to learn how to push back internally, because you do it with opposing counsel and your clients.

So, how does the billable hour fit in to Hansen’s repertoire of themes?  The practice, he says, should be to orient work around its actual value, rather than toward internal goals. Internal goals: bill X numbers of hours per year if you want to keep your job. Changing that mentality will not be easy, but it has to happen.

What is “actual value?”  Hansen says it’s the value that the work brings to clients and others, and not for those doing the work. The test is what value is being created.

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What about bonuses?  A relic of 20th century thinking is this firm’s approach.  How many firms, when doling out bonuses, do it in lockstep without client consultation? Would client consultation make a difference? I think it should, as some lawyers provide more value than others, and it’s not just a matter of blizzarding the client with paperwork. It’s being smart, savvy, understanding client needs and goals and the most efficient way to get there at the most economical cost.

We need to redesign work to make us work smarter and make it better serve the clients. The billable hour serves no purpose for the client, except in limited circumstances where the goal is to throw everything at the wall and see what sticks, and notice I said “limited circumstances.” Not every case deserves that nor should it. Spending sprees should be saved for Nordstrom’s twice yearly sale.

Alternative fee arrangements, fixed fee agreements, and other billing methods are here and now, not just on the horizon, given that alternative legal providers, eDiscovery vendors, and other creative methods of lowering legal costs are chomping at the billable hour buffet. Who here hates leftovers?

It’s up to us, especially millennials, who will be in the legal work force way longer, to figure out how best to provide legal services so that clients feel that they are getting value for what they pay. If we don’t do it, then someone else will.

As the control freaks we are (yes, admit it), we hate not being in control. The issue of fee arrangements is one area we can control, if we have the fortitude to do so and are willing to make necessary sacrifices. We all consider ourselves “top performers,” but are we really? When reviewing legal bills, I don’t think clients would necessarily agree.

old lady lawyer elderly woman grandmother grandma laptop computerJill Switzer has been an active member of the State Bar of California for 40+ years. She remembers practicing law in a kinder, gentler time. She’s had a diverse legal career, including stints as a deputy district attorney, a solo practice, and several senior in-house gigs. She now mediates full-time, which gives her the opportunity to see dinosaurs, millennials, and those in-between interact — it’s not always civil. You can reach her by email at oldladylawyer@gmail.com.

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