There’s long been speculation that the billable hour’s demise is just around the corner.
But with generative AI and rapid technological advances gaining traction in the legal industry, is the billable hour *really* doomed this time?
In a recent webinar sponsored by 8am™, the panelists — professionals in subscription legal services — agreed that it is.
“For me, it’s been dying since the moment I discovered it, which was around eight years ago, when I had to start tracking my time for the first time,” says Matthew Kerbis of Subscription Attorney LLC.
Here, we share five reasons why the billable hour will go away, according to the panelists.
(You can register for the full webinar on-demand at this link.)
It’s Not Profitable
Kerbis and his co-panelist, Kimberly Bennett of Fidu, agree that the billable hour isn’t the most profitable model. This is particularly true for solos and lawyers at small firms.
“What you’re doing is you’re capping how much revenue you could earn in a day,” Kerbis says. “And of that, how much will clients actually pay?”
The panelists point to years of legal trends reports issued by practice management companies. These reports repeatedly reveal that lawyers at small firms only collect on a few billable hours a day.
“To generate more revenue, you have to hire more billers,” Kerbis says, “and lawyers are expensive.”
It Causes Friction With Clients
As Bennett sees it, the trends reports also reveal that human error is a part of the billing process.
As a result, she says, clients will often push back on hours billed, and lawyers will often offer discounts. It’s a process that creates friction in the relationship.
“Ultimately, the billable hour is something that holds you back from creativity, curiosity, and just showing up differently for your clients,” she says.
Lawyers Don’t Even Like It
If lawyers liked billing by the hour, they would be better at it, according to Kerbis. The legal industry trends reports that show only a few billable hours a day bear out this reality.
He also cites a “cognitive disconnect” in the industry: Lawyers prize efficiency and want better work-life balance, yet the longer things take, the more they get paid.
“I think that cognitive disconnect actually plays a role in why lawyers have never really enjoyed billing by the hour,” he says.
It Hasn’t Always Been This Way
One reason behind the billable hour’s endurance is what Forbes has called “the most dangerous phrase in business”: “We’ve always done it this way.”
But Bennett notes that the billable hour is a relatively new phenomenon in the life of the legal industry, becoming the prominent model in the ’60s and ’70s.
“It’s dying,” she says. “AI is here to fast track you toward it for so many reasons, but it’s already been on that path.”
Generative AI Is Growing
Speaking of AI — Kerbis also sees its emergence as a potentially fatal blow to the billable hour model.
“When AI hit the scene, it really became the No. 1 best reason why you can’t be billing time anymore,” Kerbis says, “because it’s simply not profitable anymore with the efficiencies that AI brings.”
Enter Legal Billing Software
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