The Billable Hour

Was Katie Billing by the Hour?

Baby As I kept a watchful eye on my iPhone as my partner Brian’s wife Katie started into her 36th hour of labor, I felt a twinge of concern.  “How is she handling all that labor?”  “How is Brian holding up through all those contractions?”

And then it occurred to me.  I quickly picked up my iPhone and sent Brian a text.  “Are you sure Katie is not billing by the hour?” 

I laughed to myself raptured in my own wit.  The more I thought about it, the more I laughed.  In many ways, practicing law to a set of minimum hourly billings is like endless labor.  You and your client endure the pain of it.  But the baby never seems to come. 

Congratulations to Brian and Katie who welcome a beautiful little girl into the Traverse Legal Family!

Attorneys Need to Learn to Invest in Their Clients’ Success

Above and Beyond the Call of Duty Oftentimes, attorneys are so focused on minimum billables and hourly billing that they forget that their clients can’t pay them if their clients don’t do well.  There’s a big difference between responding to a client’s phone call for help, and actively helping a client protect and grow their business.  Providing value to a client means much more than simply putting out a fire which grew so hot that it started to burn.

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All-Time Worst Lawyer Billing Practices

How Much? As you all know, I’m not much of a fan of hourly billing.  Sometimes, we do it in litigation as part of a blended arrangement where we share risk with the client.  This can either be a flat fee cap or a contingency fee component to hourly work.  But a story I heard from a client the other day got me thinking.   What are the worst billing practices used by lawyers?  Here’s my list:
  • Calling a client who doesn’t have a live project to find out how they or their company are doing and then sending a bill to the client for the time spent on the phone.
  • Offering to pay for a lunch with the client and then sticking that as a “cost” item on the bill.
  • Billing time that doesn’t add any value to the matter.
  • Billing for cover letters which contain no substance or analysis.
  • Billing the client time when they question the bill.
Come on.  You can do it.  Give me some additions to the list.  I know you have them!

Is it the End for BigLaw or a Beginning for Change?

At a two-day conference hosted by the Georgetown Center for the Study of the Legal Profession called Law Firm Evolution: Brave New World or Business as Usual?, scholars, consultants, attorneys and law firms gathered together in debate and discussion over the future of BigLaw and its need for change. 

Here are a few excerpts from “Warnings Toll for BigLaw Firms Resistant to Change” by Rachel M. Zahorsky on the ABAJournal:

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Ronald J. Baker Continues His Push to Kill the Billable Hour

For those of you who don’t know, Ronald J. Baker is one of the foremost advocates for alternative billing and killing the billable hour.  He started his accounting career with KPMG in San Francisco.  Today, he is the founder of VeraSage Institute, a think tank dedicated to teaching value pricing to professionals around the world.

If you haven’t checked it out, he was interviewed on blogtalkradio recently about his mission to kill the billable hour.

Why "Trust But Verify" Hourly Billing Doesn't Really Work

We recently posted about some of the challenges which firms that are struggling financially face in preserving their client relationships.  Let's face it, there is always an uneasy balance of "friend or foe" between clients and their hourly billing law firms.  Some commenters replied that clients need to "trust but verify" the hourly billing engaged by their law firms, perhaps even more carefully now that there is a lot of financial stress in the system.  Others noted that big law firms who are cutting lawyers should be more trustworthy since they are at least taking measures to cut costs.  Other firms who aren't cutting lawyers may simply be engaging in "make work" projects which provide very little value to clients. 

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Clients Love Flat Fee Billing Based on Defined Deliverables

I’m in Los Angeles, California this week for a federal court status conference and facilitated mediation in an unfair competition, keyword advertising trademark infringement case.  At dinner last night with the clients, the issue of lawyers quickly came to the forefront.  Both clients’ fathers were lawyers, and are inundated with friends who are lawyers.  They wanted to let me know that they really appreciated and loved the flat fee defined deliverable billing model, which we use at our firm.  One of my clients shared a story.  His dad pulled him aside during a hunting trip when he was a teenager.  He let his son know that he was not making any money on the trip because he was tied to an hourly billing method.  His dad let him know that his friends, who were businesspeople, were all still making money even when they weren’t sitting at their desks. 

Unfortunately, neither the flat fee nor the hourly billing method allows you to make money when you’re not working in the service business.  But I am constantly being reminded by clients, especially sophisticated clients, that they prefer and appreciate the flat fee defined deliverable model.  A lot of times, lawyers and commentators discussing the issue forget that the real proof is in the pudding.  Clients prefer to know what they’re going to get and what it’s going to cost.  Lawyers prefer to know what they have to deliver and to be in a position to focus on those deliverables.

In Response to David Giacalone’s Concerns about the Ethics of Value Billing

I’m doing some research on value billing for lawyers; I came across the one blog post which beats out the GAL web site on the issue on this issue of “value billing” on Google Search. David Giacalone over at the f/k/a blog posted back on December 03, 2008 that “Value Billing-Pricing by lawyer raises many ethical red flags”.  David notes that he has been raising red flags over ethical issues concerning value billing for some time, listing the following posts chronologically:

It appears pretty clear that David has never engaged in value billing with his clients since his list of concerns don’t seem to bear any relationship to the reality of value billing.  For instance, David claims that value billing proponents supposedly make the following arguments.

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