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This article probably doesn’t apply to you, so please read it and forward it to a lawyer you believe will benefit from the message.
Like hogs nudging each other at the troth, hourly billing lawyers look for ways to gorge themselves on the slop in front of them while they attempt to, simultaneously, stick their snouts into the slop of all other pigs in proximity.
Just in case the hog analogy is too ambiguous, I will be more direct:
Hourly billing is used by unimaginative, unethical lawyers who are completely void of any and all creativity.
I will explain.
Hourly billing is unimaginative.
Trading hours for dollars has been around since the beginning of recorded history. In fact, if you look at the oldest profession, you will see that practitioners in that industry (also considered a professional service) charge by the hour today just as they did centuries ago.
Many service businesses charge by the hour. Auto mechanics, plumbers, electricians, and high school math tutors are just a few examples. And workers in entry level jobs are also paid by the hour. The supermarket clerk, bank teller, postal worker and parking lot attendant are all compensated based upon the time they put in.
The ubiquity of hourly billing makes it easy for clients to understand. This is one of the reasons lawyers give when they cite billing their clients in six minute increments. After all, isn’t complex commercial litigation akin to picking up cheeseburger wrappers in a parking lot?
“Besides, every case is different,” says the hourly billing lawyer. “Even though I have tried dozens of cases and represented hundreds of clients, how am I supposed to know what lies beneath the surface of your case? I mean, I guess I could do a comprehensive diagnostic review of your matter and ascertain your desired outcome in advance. But that would mean investing time upfront for minimal compensation. I feel like I am being nudged to the end of the troth because nobody else is doing that.”
As the “everyone else is doing it” justification surfaces we reflect upon visions of people lighting up cigarettes, eating charbroiled meat and refinancing their homes at 105% loan to value. How can it be wrong if everyone else is doing it?
Hourly billing is unethical.
Let’s say I hire an hourly billing lawyer to handle the following litigation matter for me:
A guy was going to sell me his boat and he has changed his mind. I gave him a $100,000 deposit and he refuses to refund it to me – saying he has already spent my money. I want my money or I want to complete the deal for the boat as soon as possible.
Since the lawyer charges by the hour, how does he maximize his fee? He spends as much time as possible on this matter.
Doesn’t that place his interests in this case in conflict with my interests?
I want my money or the boat as soon as possible. If the hourly billing lawyer resolves the matter quickly, he limits his compensation because he cannot bill for time that has not yet passed. Yet if the lawyer drags the matter on and antagonizes the opposing party, he stands to earn more money.
Need another example of the lack of ethics promoted by hourly billing?
Top billing lawyers in big law firms (the hogs with the largest snouts) often bill in excess of 2,000 hours per year. This means, on average, they bill 41.75 hours per week or more. That’s a little more than 8 hours per workday.
So from the minute they get into the office to the time they turn off the lights they are working on client issues. They take no time off to have lunch. They take no personal phone calls. They attend no administrative meetings or continuing education events. Every time they go to the bathroom they think about a client.
Of course, I’m sure they don’t do that. They probably have at least a couple of unbilled hours each day and probably work an additional day or two each week… That means they work seven days per week, for an entire year and bill six hours each day in order to hit that 2,000 billable hour number.
Is this possible? Technically yes. Is it likely? You tell me: Working seven days per week, nonstop for a year? Or working a combination of more hours in fewer days and taking one or two days off per month? It’s possible but not likely over an extended period of time.
Yet some attorneys consistently bill over 2,000 hours every year, play golf on weekends and manage to find time for vacation. How do they do it?
You draw the conclusion.
Hourly Billing Reflects a Lack of Creativity
What makes you different?
All lawyers look the same. All lawyers say the same things when you interview them. They are smart. They are educated. They have excellent track records. (There must be a crappy lawyer out there somewhere who keeps losing to all these great lawyers but I have yet to meet him). And they all bill by the hour.
If you want to be viewed by your client as different, come up with a different way to be compensated.
Lawyers have made themselves commodities.
The client has no choice but to compare you to everyone else based upon price. Your hourly rate has become your name tag.
The Boss says to the General Counsel: “Please call the $250hr guy for the parking lot dispute and use the $400hr guy for the executive compensation agreement.”
If you bill by the hour, this analysis may seem harsh. But you have to ask yourself:
“Would I rather be called on my bullshit by a law firm strategist or by a client?”
Think about it:
When I take you to task, it hurts your pride. When the client takes you to task, it hurts your wallet.
Call your friends who bill by the hour and tell them to lift up their snouts. Times are changing. The troth will soon be dry.