Paying lawyers by the hour. Seems like the way it’s always been, right? Not quite. Before the 1930s, lawyers typically charged fixed fees or worked on contingency. But then, new rules in the United States – around pre-trial discovery – changed the game. Suddenly, cases became more complex, and predicting the hours became a lawyer’s nightmare. Hourly billing emerged as the supposed solution – a fair balance where clients paid for the precise time spent, and lawyers got compensated for every minute of work.
Sounds perfect in theory. But like a perfectly tailored suit that’s just a little too tight, hourly billing has some uncomfortable quirks.
Here’s the rub: it removes the incentive for lawyers to be efficient. Think about it – if a lawyer finds a faster way to do something, they actually earn less. Sure, they can cram more clients into their schedule, but even then the overall revenue is capped, since there’s only so many hours in a day. So why bother innovating?
Legal work is high-stakes. Every word, every comma, every potential loophole matters. If efficiency comes at the risk of overlooking something crucial, it’s a non-starter. This gives lawyers a built-in excuse to stick with the old ways.
Plus, innovation itself takes time. Experimenting with new approaches means extra hours on top of the regular client work, just to be sure everything is done right. And this experimentation time doesn’t get billed to the client, nor does it count towards client acquisition. It’s a cost with no immediate return.
Then there’s the big elephant in the room: the uncertainty of hourly billing.
Clients struggle to budget. They often impose hourly caps, leaving lawyers in a bind when a case unexpectedly drags on. You might say we’re already following fixed fees, under the garb of hourly bills.
Similarly, law firms struggle to budget. With unpredictability of revenues, investing time and resources becomes a gamble.
Junior lawyers often see their hours written off. A common practice to make bills more palatable for clients, but demoralizing for the junior team.
Some clients even retain multiple law firms. One to handle the bulk of the work, and another to “control” the primary counsel’s costs. Talk about awkward.
So, is hourly billing on its way out? Consider this:
Associate (woefully): “I’m losing 60% of my billable hours on this case.”
Senior Partner: “Don’t sweat it. We’re now charging clients only for our expertise”, hinting at a shift in mindset. “We’re telling clients our competitors are charging them lawyer rates for work a machine could do.”
This isn’t a sudden revolution. Just as lawyers can’t bill for travel time to the library anymore, the list of non-billable tasks is growing. It’s a matter of time. And for forward-thinking firms, it’s a powerful way to signal their value – a way to say, “We're not just billing you for time; we’re billing you for results.”
Paying lawyers by the hour. Seems like the way it’s always been, right? Not quite. Before the 1930s, lawyers typically charged fixed fees or worked on contingency. But then, new rules in the United States – around pre-trial discovery – changed the game. Suddenly, cases became more complex, and predicting the hours became a lawyer’s nightmare. Hourly billing emerged as the supposed solution – a fair balance where clients paid for the precise time spent, and lawyers got compensated for every minute of work.
Sounds perfect in theory. But like a perfectly tailored suit that’s just a little too tight, hourly billing has some uncomfortable quirks.
Here’s the rub: it removes the incentive for lawyers to be efficient. Think about it – if a lawyer finds a faster way to do something, they actually earn less. Sure, they can cram more clients into their schedule, but even then the overall revenue is capped, since there’s only so many hours in a day. So why bother innovating?
Legal work is high-stakes. Every word, every comma, every potential loophole matters. If efficiency comes at the risk of overlooking something crucial, it’s a non-starter. This gives lawyers a built-in excuse to stick with the old ways.
Plus, innovation itself takes time. Experimenting with new approaches means extra hours on top of the regular client work, just to be sure everything is done right. And this experimentation time doesn’t get billed to the client, nor does it count towards client acquisition. It’s a cost with no immediate return.
Then there’s the big elephant in the room: the uncertainty of hourly billing.
Clients struggle to budget. They often impose hourly caps, leaving lawyers in a bind when a case unexpectedly drags on. You might say we’re already following fixed fees, under the garb of hourly bills.
Similarly, law firms struggle to budget. With unpredictability of revenues, investing time and resources becomes a gamble.
Junior lawyers often see their hours written off. A common practice to make bills more palatable for clients, but demoralizing for the junior team.
Some clients even retain multiple law firms. One to handle the bulk of the work, and another to “control” the primary counsel’s costs. Talk about awkward.
So, is hourly billing on its way out? Consider this:
Associate (woefully): “I’m losing 60% of my billable hours on this case.”
Senior Partner: “Don’t sweat it. We’re now charging clients only for our expertise”, hinting at a shift in mindset. “We’re telling clients our competitors are charging them lawyer rates for work a machine could do.”
This isn’t a sudden revolution. Just as lawyers can’t bill for travel time to the library anymore, the list of non-billable tasks is growing. It’s a matter of time. And for forward-thinking firms, it’s a powerful way to signal their value – a way to say, “We're not just billing you for time; we’re billing you for results.”
Paying lawyers by the hour. Seems like the way it’s always been, right? Not quite. Before the 1930s, lawyers typically charged fixed fees or worked on contingency. But then, new rules in the United States – around pre-trial discovery – changed the game. Suddenly, cases became more complex, and predicting the hours became a lawyer’s nightmare. Hourly billing emerged as the supposed solution – a fair balance where clients paid for the precise time spent, and lawyers got compensated for every minute of work.
Sounds perfect in theory. But like a perfectly tailored suit that’s just a little too tight, hourly billing has some uncomfortable quirks.
Here’s the rub: it removes the incentive for lawyers to be efficient. Think about it – if a lawyer finds a faster way to do something, they actually earn less. Sure, they can cram more clients into their schedule, but even then the overall revenue is capped, since there’s only so many hours in a day. So why bother innovating?
Legal work is high-stakes. Every word, every comma, every potential loophole matters. If efficiency comes at the risk of overlooking something crucial, it’s a non-starter. This gives lawyers a built-in excuse to stick with the old ways.
Plus, innovation itself takes time. Experimenting with new approaches means extra hours on top of the regular client work, just to be sure everything is done right. And this experimentation time doesn’t get billed to the client, nor does it count towards client acquisition. It’s a cost with no immediate return.
Then there’s the big elephant in the room: the uncertainty of hourly billing.
Clients struggle to budget. They often impose hourly caps, leaving lawyers in a bind when a case unexpectedly drags on. You might say we’re already following fixed fees, under the garb of hourly bills.
Similarly, law firms struggle to budget. With unpredictability of revenues, investing time and resources becomes a gamble.
Junior lawyers often see their hours written off. A common practice to make bills more palatable for clients, but demoralizing for the junior team.
Some clients even retain multiple law firms. One to handle the bulk of the work, and another to “control” the primary counsel’s costs. Talk about awkward.
So, is hourly billing on its way out? Consider this:
Associate (woefully): “I’m losing 60% of my billable hours on this case.”
Senior Partner: “Don’t sweat it. We’re now charging clients only for our expertise”, hinting at a shift in mindset. “We’re telling clients our competitors are charging them lawyer rates for work a machine could do.”
This isn’t a sudden revolution. Just as lawyers can’t bill for travel time to the library anymore, the list of non-billable tasks is growing. It’s a matter of time. And for forward-thinking firms, it’s a powerful way to signal their value – a way to say, “We're not just billing you for time; we’re billing you for results.”
