Billable Hours - Boon or Bane?

The treadmill of billable hours is depriving the legal profession of its heart and soul.

For many of us, it is our pro bono work that most vividly reminds us of why we became lawyers. But our pro bono and community service work is increasingly in jeopardy from the unforgiving system of billable hours. Lawyers working to meet a numeric goal find themselves unable to participate in the public service activities that we hold near and dear.

Just as insidiously, the billable hour system works to reduce a lawyer's value to his or her firm and to his or her client to mere ticks of the clock. Nowhere does the billable hour measure or reward creativity, knowledge, insight or sophistication. And in measuring and valuing nothing but time spent, it stifles efficiency.

Adoption of the billable hour was driven by antitrust concerns, by law firms' desire to measure their own productivity better, and, above all, by clients' demanding more information about their bills. While our intentions were good, we inadvertently created a system that is perversely counter-intuitive. Our clients know the price, but not the value, of the services we supply. Law firms have little incentive to evaluate their lawyers by measures other than hours billed, and young lawyers seduced by big paychecks step onto the billable hours treadmill and learn to value their own worth in six-minute increments.

Not all new lawyers do that, of course. Many lawyers - and especially young lawyers just entering practice - don't like what the billable hours system does to their quality of life. Almost 10 percent of associates leave their firm after one year, and by the end of three years that number has risen to 40 percent. General attrition from law firms has been rising as well. A study conducted by the National Law Journal found that the average attrition rate among the nation's 250 largest law firms increased from 18.5 percent in 1999 to 23.8 percent in 2000.

The problems, both personal and professional, are becoming difficult to overlook, and law firms that have searched for alternatives should be encouraged. Some have changed their billing systems to provide an opportunity to exercise some discretion when writing up the final bill - allowing a partner to add to or subtract from a bill based on factors such as "result delivered to client" and "relationship with clients." And other approaches to billing have worked as well - contingency arrangements such as incentive and value billing that focus on achieving goals and sharing the economic rewards of success, or fixed fees that set a single price for a defined task.

Alternative billing methods have been around for a long time. In fact, the ABA has published many books and offered CLE programs focused on helping law firms and law firm customers approach the issue of determining value. But these alternatives have not yet grabbed a substantial foothold in our profession. The murmurings about the need for reform have not yet become vocal demands from either lawyers or clients.

The American Bar Association has created a Blue Ribbon Commission that has been studying the effects of the billable hours system by surveying lawyers and law firm managing partners, pulling together information about how the system could work better. The Commission will look at viable alternatives, and will recommend what it thinks would work best, knowing that the billable hours system will never be entirely abandoned.

I hope that you, too, will think about the impact billable hours have had on your professional and personal life. We do not need to be ruled by the hour. There are alternatives. If we work together, and if we reach out to our clients, I am confident that we can find a solution that will serve all of us better.

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