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May 22, 2007

Revolting Against The Billable Hour

Connecticut Law Tribune - May 21, 2007, New York Lawyer - May 21, 2007 (Billable Hour = Apocalypto)

In my opinion, one of the worst remnants of a second-wave law firm is the billable-hour model of doing business. It has become the two-ton elephant sitting on the chest of most large (and some smaller) law firms.

The model is suffocating and crushing the life out of larger firms, in the form of associate and client attrition rates, and creates negative tensions with those associates and clients who remain. After all, associates' worth to a firm is based upon how many billable hours they can churn out to feed the bottomless stomach of the partnership monster, and the clients are the ones who are writing the checks.

One of the most profitable — and enjoyable — benefits of being a solo is freedom to create something new and effectuate change without having to first go through a committee.

We all talk about Darwin's oft misquoted "survival of the fittest" when, in fact, it is survival of those who can adapt. But it is best analogized to the Ice Age. Many of the larger, more lumbering animals who had long gestation cycles didn't survive because they couldn't genetically "change" fast enough thereby precluding timely "adaptation." However, the mouse (or its historical predecessor) was able to weather the environmental changes, because it was small and gestated so frequently with so many offspring (some survived, some didn't).

Now, I'm not comparing solos to mice. I'm saying the solo practitioner has the ability to "pro"-create rapidly precisely because they are solo; change isn't by committee. This enables them to change their billing practices (some will be profitable, some will not) and adapt with the times.

Why would anyone want to change the billable-hour model, which is the lifeblood of most firms? Because when one worships the billable hour, the client disappears. The billable hour has become the altar upon which we sacrifice the client.

Imagine a system whereby the resolution of a problem is given a value by the client. It is negotiated between the attorney and the client thereby creating a "budget" for the legal services. Absent any unforeseen circumstances of which there would be some contingency plan, the relationship is based upon the terms of the agreement which is a predetermined fixed value. It is results-oriented, not "hours worked" driven. The negative relationship is gone as the price for resolution is predetermined and accepted.

I will never hire a tradesman for a project on an hourly basis because there is an incentive to drag out the process. By having a budget or fixed cost, there is an incentive for the tradesman not to waste time.

If you believe this to be professional blasphemy, think again. How many times has an attorney gone to court to collect fees only to have the judge make her own value judgment about the attorney's work and reduce the fee accordingly? If solos can capture the fair market value for their work and repackage it as a benefit to clients who now no longer have to suffer under the billable-hour model, who will have more clients than they can handle?

It has been done for years in the real estate market. You know up front what a real estate closing costs as a buyer or seller. It is done in criminal practice and for simple wills, too. Some may argue the idea is not suitable for practice areas like family law. Well, maybe it is more suitable than we would like to admit. If a lawyer knew they were only going to get a certain dollar amount for resolution, they would be less inclined to participate in nonessential litigation.

Larger firms may have more of their attorneys arguing in front of the Supreme Court. But solos, well they have it over large firms in work/life balance, client relationships, office innovation, technology and now billing. It may be uncomfortable for larger firms to see the billable-hour model sullied and disregarded as unworthy by solos. But it will be these innovative lawyers who will pave the way for better client relationships and improve the image of the profession by removing the number one relationship and image-buster: the billable hour. •

Susan Cartier-Liebel, a solo practitioner, is an adjunct professor at Quinnipiac University School of Law and a business consultant for solo and small firms. Her blog, Build A Solo Practice, is at susancartierliebel.typepad.com. She can be reached at SCartier_Liebel@comcast.net. Copyright © Susan Cartier-Liebel (2007) All Rights Reserved. No portion of this material may be copied, transmitted, posted, duplicated or otherwise used without the express written approval of Susan Cartier-Liebel.

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Comments

Kambo

Great post Susan. Thanks for the terrific advice and uplifting message.

Kambo

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