Blawg Review #103
Duke Lacrosse Players Exonerated

Why lawyers love hourly billing

One of the issues, which is repeatedly overlooked in the discussion concerning hourly billing, is the fact that many law firms prefer it. Think about it. Hourly billing is the perfect vehicle to obtain the first retainer check from a client. An average retainer ranges between $2,500 and $7,500. The hourly billing model allows the lawyer to focus on determining whether or not the client can come up with that initial retainer check without discussing:

  • What results might be achieved in the matter;
  • Whether the client will receive any real value from the legal services;
  • Whether the client can afford the next payment of money beyond the retainer;
  • What the plan or strategy is concerning the matter;
  • What the client’s goals are in the matter.

Hourly billing is the perfect model for avoiding any real substance concerning the client retention conversation. Many lawyers don’t know answers to many or any of the questions implicated above. It’s not that they are not smart enough to think of answers in formulate opinions. But it does take work and effort to define the legal project, set a budget and fully understand and appreciate client goals. The hourly billing method allows lawyers to be lazy. All they need to do is confirm that the client can come up with the initial retainer and sign them up to an hourly billing system based on the single premise that "I’m a lawyer and you’re not."

The best benefit provided by value billing is that it forces lawyers to not only think about the above issues but also define them for the client and obtain agreement and consensus with the client. Value billing shares the risk between client and counsel putting them in a partnership on the specific legal matter at hand.

Can you think of other reasons why lawyers love the hourly billing system?

Comments

Chuck Newton

I do not love hourly rates, but that is how the federal system of compensation is based. There is little I can do about it. I practice in a federal fee-shifting field. It does not matter what agreement I have with my client, the Court has to determine the fees based upon Lodestar. Also, although my side typically files the complaint, in reality the other side pretty much controls the pace. I am unclear why I should be penalized for the actions of the Defendant in going forward and doing no telling what to complicate the matter.

I know some disagree, and I respect those disagreements. However, except for some transactional work or administrative work that tends to lend itself well to unit billing or alternative billing, complicated litigation is not one of those things. There are too many uncontrollable events, including the reasonableness of your client. I hate to say it, but fixed fees encourages the bombast. After all, what does it cost the client for acting out badly. After you have taken a litigation matter on a fixed fee, it is difficult to unwind the situation if the bombast causes you to resign from the case.

Frankly, I know of no attorney that like hourly billing. Nobody likes those time records. It is just inevitable.

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