Many of you may be surprised that I have no problem with the hourly rate that lawyers think their time might be worth. I do have a problem with billing by the hour. The distinction is as follows.
I admit that certain things that lawyers can achieve for their clients have value well beyond an hourly rate found on a rate sheet. When a lawyer delivers a bottom line result for a client that puts hundreds or millions of dollars in that client’s pocket, even $1,260.00 may shortchange the lawyer on the value that lawyer delivered.
But I did interesting in this article at law.com “Law Firm Fees Defy Gravity, Annual Survey Shows” is that law firms apparently continue to see increasing the hourly rate as the solution to increasing revenues. Increased revenues are becoming more important for law firms since the volume of work for many firms is severely down. If you cannot increase the number of hours worked in your firm, your only other option is to increase the hourly rate.
The flaw in this thinking is that law firms keep stepping into the same hole over and over again. They want to increase revenue, they ought to focus on providing more value to their client and charging for that value. Multiplying the number of hours worked by an hourly rate will never accomplish that goal.