Should billable hour targets be abolished?

Four senior members of the legal profession weigh in on the divisive topic of firm billing practices.

• 05 February 2015 • SME Law

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Jesse Webb
Managing partner
Sparke Helmore

“Every business, from hospitals to banks, has targets for its staff and I don’t think anyone disputes the value of targets and measures in general. In terms of billable hour targets, I think whether they should be abolished or not depends on their purpose. If their purpose is primarily to be the basis on which clients are charged, then they should be abolished. However, if the purpose is to act as one measure of business performance, then they should not.”

Ted Dwyer
Founder
Dwyer Consulting

“No need. It will disappear if clients don’t value it. But each client is different. There is a difference between time capture and time billing. Time capture is an important measure of productivity, matter profitability and fee estimate accuracy. Best practice time capture permits more accurate fee estimates and innovation, benefiting clients. Time billing is one of several billing options. The scope for pure time billing is becoming more limited. Almost all quality clients accept time billing for senior lawyers for defined periods of time. However, clients expect firms to provide accurate fixed fee estimates for larger matters.”

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Warren Kalinko
CEO
Keypoint Law

“Billable hour targets often come at a significant cost to the lawyer – to work-life balance, to family life and to pursuits outside the law. They exert relentless pressure, and this inevitably detracts from the enjoyment of practising law. They can also drive behaviours that clients don’t like, such as over-billing, the rewarding of inefficiency, and the six-minute unit. At Keypoint, we have no billable hour targets. Our principals are free to work closely with clients without having to justify their time or the investment which they choose to make in a client. This inevitably leads to closer and more satisfying client relationships.”

Katie Miller
President
Law Institute of Victoria

“The billable hour was a great accounting initiative, but does not represent a lawyer’s value. The billable hour doesn’t work. For clients, it creates uncertainty about how much they will pay. For lawyers, it distorts legal practice and priorities, with less time for professional, client and business development, as well as life outside of law. For the public, it focuses on what lawyers charge, rather than the services we provide. The LIV is supporting members to find better ways of pricing their services. 2015 is a year for change – and the billable hour’s time is up.”

Marcus McCarthy Thursday, 12 February 2015

Traditionally structured firms cannot do away with billable targets completely -their remuneration metrics are based upon it. Nor should they have to - reasonable hourly rates averaged over time at a fair daily output, is the absolute norm in every professional service industry and I wish people would stop demonising it - why should lawyers be treated any different to engineers, accountants, architects, etc . Even fixed fee alternatives are based on an amortised hourly rate. The negative spin on hourly rates and billing targets is largely premised on the misplaced stereotype of the 'greedy lawyer being deliberately inefficient', which for the most part is utterly unfounded and not industry norm. However, Warren Kalinko has the real message here. Of all the 'Newlaw' businesses, there are a only a couple of serious contenders who are playing with the structure and remuneration systems of the law firm itself - Nexus and Keypoint. These make billable targets irrelevant and hourly rates totally at the discretion of the lawyer. They are platforms for independent practice on an entirely reversed remuneration model. The smarter lawyers will be the ones who get on board with these new 'unified chambers models', as they offer some of best platforms for modern practice.

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Absurdiness Brown Thursday, 12 February 2015

Many a decent lawyer would stay in the profession (or return) if billable targets were abolished. It is incredibly stressful to have to meet targets that effectively see you glued to a seat all day, in between being interrupted by all and sundry and often with administrative rubbish that no one else wants to do or that no one wants to present in an efficient way. And then to be told 'your attitude sucks' at 6 monthly intervals.The focus should be on quality work and work that is of value. But time recording makes it all about billing. Young lawyers learn that the only value a law firm has is income. We all know that income is essential, but the importance of lawyer's work is downgraded by the intense focus on it that time recording targets cause. In my view it causes tunnel vision, and this can lead to essential facts or issues being glossed over or missed as a file is processed.I remember one particular assessing registrar (who was given to making profound, and at times, ridiculous statements) who said 'lawyers don't have time to think anymore'. He was right of course, and it is the reason so many poorly formulated matters proceed to trial. Thankfully we still have a divided profession where a fresh set of bewigged eyes will usually step in before the hearing, but by then of course the damage may have already been done.And then there's the narrations. How long does it take to type out that narration of what you did, to satisfy the future critiques of your time (partner/client/costs assessor/judge)? A 3 minute call may take 5 minutes to narrate up properly if it is particularly important. Do we now charge 2 units for that call or 1? Safest bet is a pointless file note and charge 2.{Oddly, the only time I have ever drafted coherent file notes of telephone calls they have actually been needed. Someone up there is keeping an eye on me. And she's probably in Accounts.}

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Assumption is the mother of... Wednesday, 11 February 2015

Another comment that betrays the remarkable bias on the part of the very same people that claim to be victims of bias on account of being women and/or mothers. Families are not the only legitimate "distractions" outside work either - something often assumed in the gender debate. As for "efficiency", have a look at how many non-productive initiatives males (and non-mothers) have to participate in at work (BD meetings, client events, knowledge management) while mothers work from home or get to leave at self-determined mid-afternoon departure times to watch the kids (which, in my experience, have often been found to be "generous" characterisations - employees have been found to be "working from home" while at the beach, on the farm, and even shopping, while the kids were actually with a nanny/family). I have no issues with women (or men) juggling other responsibilities, but the people who juggle those things need to accept that having those other things comes at a cost - it may mean they are unable to (and thus will be seen as not) contributing to the same extent as others - that is simply a fact. The trade-off is that they have those other things that are important to them. It is not appropriate for those not juggling as many responsibilities to "hold the fort" while the others tend to said other responsibilities. Hence one (just one of many!) of the reasons (in addition to previous gender bias from previous decades which takes time to "re-calibrate) why we have a disproportionate number of men in senior ranks - it is not always evidence of gender bias, many females juggling other responsibilities decide, of their own volition (not by some demon HR policy that kicks out mothers - in my experience most firms are very eager to implement flexible arrangements), that in-house roles are more accommodating and attractive for that lifestyle - because they are, by their nature, less demanding than corporate law firms that have billable hours. Not every decision made in every promotion is made through the lens of gender bias...

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Gordon Rope Esq Tuesday, 10 February 2015

If I were a billable hour I wouldn't know where to spend my time.

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B Tuesday, 10 February 2015

Well, that's the most sexist statement I have ever read:They are a bane for professional women juggling other responsibilities with their job. Woman (sic) lawyers have to be more time efficient than their male counterpartsBecause no male lawyers juggle other responsibilities? In my travels I have met inefficient male and female lawyers and can I note that, in my experience, there are as many inefficient women as there are men.

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Shovel Tuesday, 10 February 2015

Any basis or evidence other than a need to validate the whole gender agenda & pump up your tyres at the same time? '' Women lawyers cost the client less'...' baseless ,self deluding & plenty more that I don't have time to write because I am busy doing my own version of juggling responsibilities in my obviously less efficient male way.

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Joe Monday, 09 February 2015

They are a bane for professional women juggling other responsibilities with their job.Woman lawyers have to be more time efficient than their male counterparts and prbaly cost the client less for the same work which may have been undertaken by a male ot so time constrained.

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Swarley Friday, 06 February 2015

Billable hours are a rort, allowing inefficient lawyers to squeeze ever-larger amounts of money out of clients.What weasel words coming out of the first couple of respondents. "Depends on their purpose", "It will disappear if clients don't value it" - what a joke, just admit that you're happy taking a whole lot of extra money off your clients! This rip-off is here to stay until someone outside the profession bans it, and the worst offenders are well aware that that won't happen in a million years

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Chantal Friday, 06 February 2015

Interesting how Ted Dwyer pointed out the difference between time capture and billing. As in, it seems time capture is integral for providing accurate fixed fee pricing for client services; something clients value over time billing anyway. 

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