Aug 17, 2007
I recent wrote about the billable hour here in The Death of the Billable Hour, Wishing Does Not Make it So. Susan Cartier Liebel left a comment with a link to her excellent post The Cockroach of the Legal Profession – The Billable Hour. The most surprising fact – one that many lawyers are not aware of I would guess – is that the history of the billable hour in the legal is a relatively short one.
Douglas McCollam in a 2005 article in American Lawyer, The Billable Hour: Are Its Days Numbered? traced the history of the billable hour to the then nascent theories of ‘scientific management’ and (ironically) a Legal Aid society.
In 1914 Reginald Heber Smith, a recent Harvard Law School graduate, took over the Boston Legal Aid Society and enlisted the Harvard Business School to help him devise a detailed system to track and manage the organization’s finances. One of his innovations was to have the lawyers begin keeping detailed records of their time on different cases.
Smith took his methods with him to his new firm, Hale and Dorr where he became managing partner. In a short book, Law Office Organization, Smith wrote that “The service the lawyer renders is his professional knowledge and skill, but the commodity he sells is time.” To both the practicing or prospective lawyer, having the accumulation of ones skill, knowledge and training referred to as a “commodity” should be chilling. A commodity (think oil, coal, sugar, etc.) is a product for which there is always demand, but demand without regard to ‘qualitative differentiation’ across a given market. Meaning, in Smith’s formulation, that an hour of one lawyer’s time is no different, or at least of no greater value, than any other lawyer’s. Commodities markets are generally characterized as ruthlessly efficient. No commodity dealer can charge a premium for his product because it’s indistinguishable from any other on the market. The only way commodity dealer can compete is on the basis of volume. If legal services are truly a commodity then the only way one can make more money is to put in more time. Sound familiar?
According to Ronda Muir, the billable hour remained somewhat anomalous in the legal profession until starting to gain traction in the 1950′s.
In 1975, the Supreme Court, outlawing both the capped 1800s practice and the base system from the 40s, held that set fees for legal services constituted price-fixing, and was a violation of the antitrust laws. In response, by the late 1970s, most lawyers charged for their services based purely on hourly billing.
Recognizing the widespread dissatisfaction in the profession caused by pressures of billable hour requirements, the ABA undertook a study of the practice, the results of which were published in the ABA Commission on Billable Hours Report (2001-2002) (.pdf). Ronda Muir did the math based on the ABA’s recommendations in , A Short History of the Billable Hour and the Consequences of Its Tyranny –
This time, the ABA recommended billing expectations of 2300 hours annually, composed of 1900 hours billable to clients plus a total of 400 additional hours for: firm service (100 hours), pro bono (100 hours), client development (75 hours), training and professional development (75 hours) and professional service (50 hours). Those expectations translate into a total 9-10 client and other hours @ day, five days @ week, 48 weeks @ year. The standard guideline for billable hours is that it takes approximately 10-12 hours to bill 8 hours. In which case, to achieve the ABA expectations, lawyers would be expected to work 12-15 hours daily.
Billable hours are not foremost in the minds of most law students when slogging their way through law school. This account from the Stay of Execution Blog is probably typical -
I didn’t focus much when I was a law student on billable hours. I was on the BIGLAW track — I figured, I’m smart enough to play in the biggest ponds, I don’t want to hear the wimps and the naysayers whining about “quality of life.” I figured that was silly sour grapes stuff from people who couldn’t hack it. Then I got to BIGLAW and I saw how miserable this timing of every minute can make people. Including me.
Of course lawyers themselves aren’t the only ones affected. See the perspective of a child of a BigLaw partner at Blue Rabbit Hutch:
As much as I admire my dad for the example of hardwork and honesty and integrity that he set, I think I would’ve been just as happy with someone who was less stressed, overworked and underappreciated, or who was at least better able to keep the side effects of that pressure out of the home. My dad made a valiant effort to participate in our upbringing, being supportive of our activities, triumphs and failures. But work pulled him away all too often. It’s easier to understand now, but it was hard as a self-centered kid. And I think he was probably always considered a little too “soft” at his cutthroat firm anyway, because of the time he did take for his family. So really, he couldn’t win anywhere.
Of course quality of life for lawyers is not the only problem posed by the billable hour. The overriding incentive of the billable hour regime is to bill as many hours as you can get away with. When you have a fiduciary duty to your client and a minimum billable hour requirement from your firm, the conflict is inevitable.
So, law students, what to do?
First, make yourself aware of the reality of legal practice. You’ve made a tremendous investment in money and time to go to law school. Wouldn’t it be worth investing a little time to figure out what you’ve gotten yourself into? I’m stunned at how much some of my fellow students seem not to know about the practice of law and how little interest they show in learning more.
Second, know thyself. BigLaw practice isn’t for everybody, but somebody’s got to do it and a lot of those people love it. You might be one of those people. We’ve been on the law firm reception tour the last few weeks and many of the lawyers I’ve met clearly love what they do and regard the sacrifice as well worth it. Others run screaming from it the first year of practice. See this resignation letter from a former associate at Greenberg Traurig who apologizes for accepting the job in the first place.
Third, if you do find that it’s not the life for you, figure out your alternatives. There are alternatives.
(1) You might decide to hang out your own shingle. When you’re the boss you get to set the billable hour requirements at whatever number you see fit. You have to eat of course and there are bills to pay, but if control is what you’re after, being your own boss is a good way to get it.
(2) You might choose a practice area with this in mind. D. Todd Smith notes in Texas Appellate Law Blog: Is Appellate Law Suited to Alternative Fee Structures?, that “[c]ertain features of appellate practice make breaking away from the billable hour possible.” Nearly every appellate practitioner I’ve spoken to has mentioned quality of life and predictable (not always fewer) hours as a big reason they’re in that practice area.
(3) Know the culture of the firms you’re interviewing with ahead of time. Talk to the attorneys, ask them about their experience. All firms feel the pressure of billable hours, but different firms deal with it differently. Know who you’re getting into bed with. If you’re going to work those hours make sure it’s with people you’ll enjoy being around for a significant portion of your day.
- Susan Cartier Liebel, The Cockroach of the Legal Profession – The Billable Hour, Build A Solo Practice Blog
- Douglas McCollam, The American Lawyer, The Billable Hour: Are Its Days Numbered? (November 28, 2005).
- Niki Kuckes, The Hours: The short, unhappy history of how lawyers bill their clients, Legal Affairs (Sept. 2002). (via Idealawg)
- ABA Commission on Billable Hours Report (2001-2002) (.pdf)
- Ronda Muir, A Short History of the Billable Hour and the Consequences of Its Tyranny, Law People Blog.
- Billable Hours, Stay of Execution Blog.
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