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Lawyer Billable Hour

In the August issue of the ABA Journal, Scott Turow calls for an end to the billable hour [link no longer available]:

When I left the government for private practice in 1986, the hours expectation for young lawyers was 1,750-1,800 hours a year in the large Chicago firms. Today it’s 2,000-2,100—even 2,200 hours. And the only real outer boundary is that there are 24 hours in a day—and 168 in a week. Increasingly, if we allow time for trivialities like eating, sleeping and loving other people, it is clear, as a simple matter of arithmetic, that we are getting close to the absolute limit of how far this system can take us economically. . . .

[T]he prospects for success for lawyers have markedly diminished over the years. Vir­tually all firms today make fewer partners and take a longer time to do it. And the smaller you make the eye of the needle, the more young lawyers arrive on the job as uncommitted nomads: at best, acquiring skills they’ll take elsewhere; at worst, cynically trying to pile up money before the ax falls. But both states of mind alienate them somewhat from the workplace, the colleagues they work with and the clients they serve.

Worst of all, however, is that when somebody is working 2,200 hours a year, he or she has less chance to pursue the professional experiences that nourish a lawyer’s soul. Lawyers of all stripes can and should offer their services for free to the needy, but I find it hard to imagine more satisfying work than pro bono litigation. That is because when you give the poor and powerless access to a just forum, there is a triumph—no matter what the outcome in a case. And the lawyer who is involved in doing that learns an invaluable lesson about the power and goodness that is inherent in being a lawyer. . . .

But at the end of the day, my greatest concern is not merely that dollars times hours is bad for the lives of lawyers—even though it demonstrably is—but that it’s worse for clients, bad for the attorney-client relationship, and bad for the image of our profession. Simply put, I have never been at ease with the ethical dilemmas that the dollars-times-hours regime poses, especially for litigators. And in this regard, I think my views depart from what is commonly acknowledged (including, I hasten to add, by disciplinary authorities, who of course have not disallowed the current system).

I agree that the billable hour is a terrible thing. Some reasons why:

1. The billable hour leads to a considerable amount of unhappiness in the legal profession. Lawyers at big firms must work insane hours to compete. The joy and craft of practicing law turns into a sleep-deprived all-consuming sacrifice of one’s life and well-being to churn out the necessary hours.

2. The billable hour isn’t very good for clients, for many reasons Turow states in his article.

3. The billable hour rewards the inefficient lawyer more than the efficient one. Imagine two lawyers. Lawyer 1 is average in the time it takes her to complete her work. Lawyer 2 is an exceptionally fast worker, and she works in intense bursts of productivity. Lawyer 2 is able to do the same quality of work in half the time as Lawyer 1. Lawyer 1 will thrive under the billable hour system. Lawyer 2’s work, however, is only earning the firm half of what Lawyer 1’s is. The client will obviously like Lawyer 2 better. But the firm will like Lawyer 1. One might say that Lawyer 2 should just do more cases, thereby increasing billables by doing a greater volume of work. But people aren’t machines. People who work in bursts of productivity cannot sustain that for extended periods of time.

4. The billable hour does little to measure and reward quality of work. It simply measures how long it took an attorney to complete a particular task. Of course, firms care about quality work, which is essential to keeping clients and getting good results. But the billable hour doesn’t provide rewards for work that is truly exceptional. It rewards time, not quality.

But what can be done to replace the billable hour? Is there a good solution? For plaintiff work, there are contingency fee arrangements (typically a third of whatever money is won). But for defense, regulatory, or corporate work, which is largely what is done by big law firms, contingent fees don’t work.

One possible alternative is flat fees for certain kinds of work based on an estimate of the time and complexity involved. The difficulty, however, is predicting in advance the amount of work certain matters will involve. Such a system might encourage firms to take on too much work and then rush to complete it all, thus sacrificing quality in the process.

Is the billable hour broke? Is there a better alternative?

Originally Posted at Concurring Opinions

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This post was authored by Professor Daniel J. Solove, who through TeachPrivacy develops computer-based privacy training, data security training, HIPAA training, and many other forms of awareness training on privacy and security topics. Professor Solove also posts at his blog at LinkedIn. His blog has more than 1 million followers.

Professor Solove is the organizer, along with Paul Schwartz, of the Privacy + Security Forum and International Privacy + Security Forum, annual events designed for seasoned professionals.

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