Image [cc] – Tomozaurus

Jane: The billable hour is dead, Dan. It is the sad and lonely remnant of an era when clients were to stupid to realize they were being fleeced by outside counsel. I for one can no longer, in good conscience, blatantly steal my client’s money. I officially declare the billable hour six feet under, pushing up daisies, defunct, deceased, kaput. Never to be heard from a…

Dan: OK, OK. I get it. You do realize, Jane, that repeating something incessantly doesn’t make it true, it just makes you slightly more annoying than usual. Also, as a graduate of North Tuvalu Online Law School, I’m pretty sure you’re stealing your client’s money regardless of the billing arrangement.
Jane: Woo hoo! Go Land Sharks! I choose to ignore your petty insults, Dan. They are nothing more than the last dying gasp of a big dumb lizard.
Dan: What is that supposed to mean?
Jane: It means that you, my unfriend, are a post-asteroid BigLaw Dinosaur. Desperately grasping at the last lingering rays of light before the sun is forever blocked out, the plants all die, the critters that eat the plants pass away, and your BigLaw Tyrannosaurus — still billing by the hour — ignominiously starves to death.
Dan: OK, first of all, paleo-breath, the dinosaurs that survived evolved into birds not reptiles.  Secondly given your ridiculous scenario, my Tyrannosaurus would die of dehydration or disease long before it starved to death. And finally, you’ve taken this metaphor waaaaay too far. I have no idea what your original point was.
Jane: My point IS that the billable hour, by its nature, creates terribly perverse financial incentives for the attorney and provides absolutely no value whatsoever to the client.
Dan:  I have no idea how that relates, but let’s move on. Perverse financial incentives?
Jane: By rewarding the total time spent working, rather than the actual work completed, the billable hour incentivizes attorneys to either do more work than is necessary, or to work more slowly. Either way, the client is paying more for less relevant work product.
Dan: I’ll keep this really simple for you Jane; the method of billing doesn’t incentivize anything.  The structure of attorney compensation is the problem. Take for instance the guy that changes the tires on your pickup truck. He doesn’t care whether the garage charges you for parts and labor (hourly billing) or a flat rate. He only cares how HE is compensated. If he is paid based on how long it takes him to change the tires, rather than the number of tires he changes, then he’d be a fool not to double tighten your every lug nut and thoroughly polish your rims.
Jane: You pig!
Dan: What?
Jane: I… don’t know, but it sure sounded… Anyway, your argument fails to take into account that by artificially increasing revenue, the billable hour incentivizes the owner to create those bad compensation structures in the first place. Any way you look at it, the billable hour amounts to little more than institutional theft and I, for one, am shocked that you would defend, even advocate for such chicanery!
Dan: I’m not advocating for anything! I’m saying that, as usual, you have entirely missed the point! For certain engagements, certain clients will always be best served by aligning effort and outcome, not just focusing on the outcome. Your attempt to prematurely bury the billable hour is severely hampered by the fact that it is still the most prominent method of billing for legal services. I’m not saying it is the greatest thing ever, or even appropriate most of the time, just that the problem for clients is that the cost of legal services has steadily risen, while the value they have received in return has stagnated. This is not a problem of billing practices; this is a lack of management oversight. Law firms need to completely rethink the way they manage their practices, the way they compensate their attorneys and, yes, the way they bill their clients! But even if the billable hour as a concept were to completely disappear from the face of the earth tomorrow, the vast majority of the problems facing BigLaw and their clients would remain entirely unaffected!
Jane: ….
Dan: C’mon, Jane! No snappy comeback? No witty repartee?
Jane: The last dying gasp of a big dumb turkey.
Dan: I’ll take that as a no.

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Photo of Ryan McClead Ryan McClead

Ryan is Principal at Sente Advisors, a legal technology consultancy specializing in innovation strategy and cross-platform solutions and support.  He has been an evangelist, advocate, consultant, and creative thinker in Legal Technology for more than 15 years. In 2015, he was named a FastCase 50 recipient, and in 2018, he was elected a Fellow in the College of Law Practice Management. In past lives, he was an Innovation Architect, Knowledge Manager, a Systems Analyst, a Fashion Merchandiser, and Theater Composer, among other things.