The Decline of the Billable Hour

In Melville’s time, lawyers charged by the word.

Do alternative billing arrangements make sense? Is there an appropriate way to charge clients other than the billable hour?

I don’t think you can speak of “the law” monolithically. When it comes to “lawyer as scrivener” a law firm should, in 95% of the cases, be able to quote a fee for a project. Keep in mind though, that this is where AI research is most active. Soon drafting a document will be coding standard responses and fees, except for software licensing fees, will drop accordingly. What separates “Big Law” from the solo is the large firm’s precedents library and its ability to leverage its experience with past similar transactions.

American lawyers, at least, usually don’t know what a precedents library is, never mind trying to monetize it. (“You mean a forms book?”) Even the Dewey, LeBoeuf bankruptcy trustee made no effort to monetize these in the bankruptcy. When do alternative billing arrangements make sense?

When it comes to “lawyer as actor” (for lack of a better term); when a lawyer is handling a contentious matter; or trying to get a result from a regulator: the lawyer can only play one side of the chessboard. If you let me play both sides I can make the game as long or as short as you like and charge within your budget. But if I’m playing only side only, I have no control of what the other side may do; I have to meet each move with a counter-move and costs spiral out of control. Here there is no AI, no proposals to reform the system, just weeping and gnashing of teeth.

Still, there are ways to seek economies when dealing with the “lawyer as actor.” All too many lawyers begin the game by squabbling like Bobby Fischer about lighting, noise in the auditorium, the type and placement of chairs, etc. before actually sitting down and playing the game. If I know that my client can be served with process — even Osama bin Laden was served (substitute service=service) — why don’t I agree to waive service? The federal rules hold out a carrot for those who cooperate — sixty days to answer a complaint instead of thirty. State practice is unnecessarily multifarious

In the state courts, lawyers must think that clients are ignorant. Instead, lawyers believe that you must (really?) explore all avenues that might lead to winning the case. So the response to a summons and a complaint is a motion to dismiss. The motion to dismiss is set for hearing, three months in the future. There’s a ten minute hearing (for which the attorney bills two hours: travel to the courthouse, waiting time while all the other ten minute hearings take place, drafting an order and then driving to the office to write a letter to the client saying, “a hearing was held, we were ordered to answer, my secretary will be sending over an initial discovery package along with a draft answer to the complaint. Oh, and my bill for today.”

In some jurisdictions, the lawyer will bill his secretaries’ time as if it were his own. I know that lawyers are not supposed to do this, but they do. Until the FBI brings a few mail or wire fraud prosecutions (given my antipathy towards an unconstitutional national police force, this should really be managed by the Florida Department of Law Enforcement (state police forces are not unconstitutional) these practices will continue. [Parenthetically, what is wire fraud? Tell a lie for gain and use a computer or a telephone. What is mail fraud? Tell a lie for gain and lick a stamp.]

The result of all this running around is that the lawyer pulls out a form answer, fills in the blanks, drafts a few paragraphs, and (these days) e-mails it in. In the meantime, the client has paid $1000 for nothing. Woe be to you lawyers: increasingly, clients know that they have paid for nothing and are upset about it. I cannot help but think that one of the engines pulling arbitration is an effort to halt uneconomical, meaningless squabbling before the courts. The movement towards alternative billing arrangements for “lawyers as actors” is really an effort to get the cost of contentious matters under control. In the future, lawyers who fail to control these costs will lose business to arbitration practice as well as disintermediation software that somewhere a coder is writing.

The screed and opinions published here are my own and not that of any other party. Yes, I know, some answers cannot be reduced to a form. The chances of a high-schooler discovering a new perspective on Salinger’s Catcher in the Rye while writing a paper for English class are as slim as the possibility that a supermarket slip and fall will be unique. For every cup of McDonald’s coffee that causes third-degree burns, there are millions that are only quaffed.