Wednesday, January 26, 2011

Why Do Lawyers Bill They Way They Do?

(thanks to mybikesforum.com)

I googled for images of bills and got this. Wild Bill reviewed this Vanquish and I fell in love with it, so I left it in.

In Law Without Walls the students have to undertake 'Projects of Worth'. One of the students emailed me today with an interesting problem.
My project of worth is alternative strategies to the billable hour. I have read about the topic and I found that there has been plenty of research on both the pros and cons of the billable hour and reasonable alternatives to it. 

Therefore, my partner and I wanted to ask some of the LWOW mentors for advice on how to approach the project. I would like to research, through interviews, a new aspect of the legal billing world that is practical and can be used by either attorneys or clients, as opposed to just writing a redundant paper. I was wondering if you have heard of or knew of any ideas/narrower topics that legal academics have been asking about/looking to research relating to alternative fee arrangements and the billable hour.
This is a tricky one and my response went thus:
This is an interesting area, not so much for the technicalities of the topic, on which you rightly say there is quite a bit. From my perspective it is the cultural aspect. Why are lawyers so wedded to a system that everyone else uniformly hates? How many other types of business use their method? Not so many, I guess.

Lawyers would probably say that their work is replete with uncertainty and contingency and therefore doesn't permit successful use of alternatives. Rubbish! We know that Quin Emmanuel, a successful litigation firm, uses contingency fees to escape billable hours. And plenty of other businesses are full of uncertainty, eg, banking and consultancy.

Now we know in the last couple of years--recession crisis time--it was thought (look at the discussions on Legal OnRamp) that the billable hour would die. If so, then its death was foretold a trifle early. It still reigns. So at best lawyers paid lip service to change.

And there is the crux. Lawyers are resistant to change. Of course law is built on new ideas but also systems of precedent, authority, respect for the past. Lawyers are conflicted.

I would look at this comparatively across industries and see how change was managed and how it could be transported to law. If you took banking as an example then you could contact and ask Peter Kurer who has been both general counsel and CEO of UBS. I think you could interview people in other industries about what they do in their industries (obviously service industries) to their own clients and then how they feel about their lawyers' practices in billing and service.

I think you have to start with the idea that law is like Alice in Wonderland where the Red Queen makes any word mean what she wants. Change would have to come both from within and outside. But perhaps the essential question is what is it that lawyers are actually doing for their money? As professionals they are supposed to be applying expertise to problems (a la Susskind), so what is their expertise and how should it be monetized?
I received a comment from Peter Lederer on this who said:
It is indeed interesting. For me what comes to mind is flat fees. A divorce for x, an acquisition of a company valued at $500m costs y. Firms that do this know how long it 'usually' takes and charge accordingly.

'But there could be cost overruns!' Sure, but how about the neurosurgeon whose brain surgery turns out to last 9 hours rather that the expected 3? Or the airline pilot forced into a holding pattern or a diversion for many hours? No change in fee or compensation, is there?
With which I agree.
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1 comment:

Google Advertising said...

Don't you think this is unfair? What if people don't agree with that bill? Do you have the sake to still implement that? Lawyers should have been prioritized the fare method.