Background on the Ad Hoc Committee on Billable Hours

American Bar Association Immediate Past President Robert E. Hirshon established the Commission on Billable Hours to investigate and report on the effect of the billable hour system on the legal profession. President Hirshon recognized there was a growing concern that the demands of increased billable hours were having unintended consequences and compromising the health and well-being of lawyers and the communities which they serve. At the same time, time-based billing practices can raise ethical questions and create perverse disincentives.

For generations, lawyers had billed for the value of their legal services with a variety of different methods, all of which were based on some variation of the factors set forth in the Rules of Professional Conduct. Straight hourly billing became the predominant billing method only within the last 50 years. Since that time, law firm costs - including associate salaries -- have escalated. As a result, many firms have had to increase rates, where competition has allowed, and billable hours on an annual basis.

Attention to the problems of hourly billing was highlighted by a reported pro bono crisis to the effect that there had been a serious decline in the number of pro bono hours contributed by large law firms. Reports suggested that the decrease in volunteer representation has been directly attributable to the escalation in law firm costs and the concomitant demand for lawyers to work and bill more hours.

Associate Justice Stephen Breyer of the United States Supreme Court gave a keynote speech at the 2001 Annual Meeting of the American Bar Asssociation on "Our Civil Commitment" in which he expressed concern about the reported drop in pro bono work performed by lawyers. In that presentation, he spoke convincingly of the lawyers' responsibilities (i) to perform pro bono work, (ii) to participate in the process of developing or reforming the law, and (iii) to be a teacher of legal and constitutional values. Justice Breyer is an Honorary Member of the Commission and has promoted the importance of the Commission's work.

There is no doubt that new lawyers are feeling the treadmill effect of having to record high levels of billable hours. Many law school graduates are drawn to accept high paying jobs with law firms in order to make meaningful payments on their law school loans. After a few years, many newer lawyers become discouraged with high hours and lack of mentoring, training, collegiality and the opportunity to perform pro bono work. Those who entered law school with the intention of embarking on a career in public service or public interest law are especially disaffected. At the same time, public sector and public interest employers are finding it increasingly difficult to recruit and retain lawyers.

Many experienced practitioners also are concerned that their worth is being judged predominantly in terms of the numbers of hours billed and not on the quality of those hours or on other factors, such as supervision of junior lawyers, involvement for the firm in community activities or pro bono contributions.

The unintended consequences of billable hours extend even more broadly than its demoralizing effects. Many clients have fallen into the trap of what President Hirshon refers to as "drill down valuing" where the client values legal services rendered as merely the sum of the micro-specific components. This type of valuing protects the client from padding and other over-charging abuses, but in its effort to micro-manage services rendered, the client loses focus of a larger, more fundamental concept of value. At the same time, incentives are created that run counter to the client's best interest. Many believe that if we innovate our billing models, not only are the same revenues attainable, but lawyering itself will become more enjoyable.

The Commission on Billable Hours issued its report in August, 2002 at the ABA Annual Meeting in Washington. The report is posted on this website. In addition to its report, the Commission created this online toolkit to be used by lawyers, law firms, and bar associations to create discussion, educate lawyers and provide the information necessary to implement alternative billing methods and be more creative in their approach to billable hours.

The ABA Section of Business Law, enthusiastic about the continued study of the impact of the billable hour, now houses the entity, renamed the Ad Hoc Committee on Billable Hours.

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