f/k/a . . . the archives

July 26, 2007

Presumed Ignorant: Scott Turow on the Billable Hour

Filed under: viewpoint — David Giacalone @ 5:09 pm

Scott Turow gets a solid A for his skill as a legal storyteller. But, he doesn’t even merit a Gentleman’s C for his analysis of the ethics and economics of hourly billing. See his article for the current ABA Journal, “The Billable Hour Must Die” (August 2007). In his cover piece, Turow sees the billable hour as the source of all sorts of evils — from inefficiency and client suspicion, to associate disillusionment and ethics violations. His presumption of guilt for the billable hour reflects superficial analysis and group-think. The many logical and theoretical errors roused me (again) from my punditry break, leading me to leave the following Comment at the ABA Journal website:

Scott Turow has chosen the wrong target, by joining the crowd and blaming the billable hour, rather than the greed of law firms and lawyers. Unless lawyers are willing to make less income/profit, a switch to alternative billing methods will benefit neither clients nor the lawyers who feel crushed by billable-hour quotas. See my post “chronomentrophobia” and the linked material.

[image by Jeff Dionise, ABA Journal]

As explained in that posting, there is nothing unethical about hourly billing, as long as the lawyer sets the hourly rate by using the factors that Turow wrongly complains are irrelevant to hourly billing (such as experience, complexity, skill required, etc.), works efficiently and competently, and keeps the client well-informed. (Of course, the ethical lawyer knows that “actual hours X rate” is the maximum that will be charged the client — with hours reduced for time used inefficiently or getting up to speed in a new field.)

Clients expect “alternative fee arrangements” and “value billing” to result in lower overall fees. It’s the Alternative Billing gurus, who tell lawyers they can switch from hourly billing and make higher “premium” fees while working less, whose ethics need to be scrutinized.

Life will not get more balanced for associates, if the regime of billable hour quotas is discarded, unless it becomes perfectly acceptable for the young lawyer to generate less income without it affecting future partner status. Indeed, if the firm management still expects each lawyer to produce the same amount of billed income, it might get even more stressful — the associate won’t know how to keep score; won’t know if he or she is keeping pace for the year. That might be especially true if fee contracts with clients are based on some post-completion assessment of the “value” of the performance to the client.

Complaining about “the billable-hours regime” is like a condemned man complaining about the executioner using a rope. If they get rid of the rope, they will substitute another means to secure his death. It’s the death penalty that is the problem not the rope. Similarly, it is the insistence that enormous amounts of fees be generated by each lawyer that is the problem for clients and lawyers, not the formula used to calculate the fee.

update (July 30, 200): Carolyn Elefant beat me to the punch at MyShingle with her critique of Turow’s article called “The Problem with Billable Hours — or the problem with Lawyers?” (July 24, 2007). It is a well-said and incisive post. And, see the discussion and thoughtful comments at The Legal Ethics Forum, plus my second Comment (#5) at the ABA Journal. And, note that Prof. Daniel Solove at Concurring Opinions is surprisingly blind to the efficiency challenges and ethical temptations of every other kind of billing system. As long as law firms demand, and the profession as a whole approves by its silence, ethically-hostile work environments that require that each lawyer generate impractically-large amounts of fees, the billing system used will be irrelevant. (see our post Sanction this (firm)!) That point is so obvious, that one cannot help but conclude that the focus has been so vehemently placed on the billable hour (as opposed to billable hour quotas) in order to avoid having to make the switch from systematically milking to habitually serving clients.

afterthought (Aug. 18, 2007): Please read our post, “broadening the billable-hour debate — consider yourself, your clients and your ethics” (Aug. 18, 2007).

in my thicket
they’re out of time…

spring mist–
people without hoes
wasting time

………………….. by Kobayashi Issa, translated by David G. Lanoue

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