Last night (April 13th, 2021) I had the privilege of being on the “stage” for a Clubhouse discussion around the Billable Hour. Is it alive and well? Yes. It is COVID resistant. Is it ever going to change? Hopefully! What do in house counsel think about the billable hour? Some hate it, some love it.
The Billable Hour, is it the industry’s friend or foe?
When I was asked what the Billable Hour meant to me, I suggested that the Billable Hour is the scapegoat for everything that is wrong with the legal industry. It’s an old model that has not moved with the times, it’s a perpetual cycle of gloom. But it’s comfortable, its working (mostly) and a paradigm we all understand. And I have purposefully chosen to capitalize the term here, as I feel like in this industry the Billable Hour has earned a proper noun moniker.
Unpacking the long-established Billable Hour is messy and complicated. Some of the discussion points last night were around the cost of law schools, the pedigree of firms vs the pedigree of GCs, CEOs or other buyers of legal services, the impact of the billable hour on associate wellness and the impact of the billable hour on bias when staffing files. We also heard from in house counsel who preferred the billable hour because it was a metric that could be tracked and traced and accounted for – data runs the world.
I am probably breaking every Clubhouse rule by sharing the conversation and I sort of feel like I should channel my inner Toby Brown when writing this post which is all about practice efficiency and the current or changing business models for buying legal services. Value came up a lot – there was much mention of how to create and assign value to legal work, how to quantify the value of legal services both bespoke, bet the company work and regularly daily legal assistance. I think once we crack the code on value – and have an agreed upon metric that we can counterbalance against Billable Hour, currently the only quantifiable data point, then we will be in a better place to review the Billable Hour and all that it represents. That is, in part what the Legal Value Network is trying to help the industry create. And it’s necessary because we know the current models are flawed – hence the rise of the ALSPs, the non-partner track associate and the various law firm in-sourced or captive ALSP divisions. The markets are changing we see elements in all parts of the workflow.
We ended the discussion by thinking about how we foresee people reflecting on the Billable Hour 20 years from now….on some level you hope it will be gone and on another level it’s a part of the fabric of industry. I think it will change, I think there will always be engagements that are billed hourly but that the notion of the Billable Hour as the defacto business model and basis for compensation, targets, credit attribution will evolve. A year ago, Cloud computing was still dubious in the legal industry and working 100% remotely was unheard of, but a global pandemic changed that. Today we see both cloud adoption and a real shift in the mindset around remote working. I think this is just the beginning of a cultural shift within the industry one that is a long time coming. I hope in 20-30 years that if we are still talking about the Billable Hour we’ll be talking about its real evolution and how while it was a difficult transition, we got through to the other side and the industry is better for it.