Like many billable hours articles, this mixes three concepts: (a) charging by the hour (as opposed to a fixed fee), (b) the cost of legal services (and related economic pressures), and (c) lawyers who work harder than they want to (or just don't like what they do). Although all of these have a connection to big law firms (disclosure--I am a partner in a big law firm), they are fundamentally different issues. Moreover, (b) and (c) have next to nothing to do with the billable hour.

Regardless of its origins, the heart of the billable hour now is that it remains the best way of pricing given regulatory constraints on lawyers, the fundamental lack of a clear definition of success, and the fact that clients retain ultimate decision authority while relying on lawyers for advice. Basically, the problem is that it is very difficult, if not impossible, to know in advance what a desirable outcome is in a piece of complex litigation. Facts need to be gathered, arguments need to be researched, and risk tolerances need to be assessed. All of these things happen over the course of representation and aren't known in advance. Further, things change over the course of a case. A seemingly bad settlement outcome can become a good outcome after an unfavorable evidentiary ruling, the emergence of a bad fact, or an adverse development in the law. Similar considerations apply to many other forms of representation (e.g., securities filings, administrative proceedings, legislative work, etc.). All of this uncertainty is what preserves the billable hour--neither side knows at the beginning how to price many complex pieces of work any other way. Notably, many very complex transactions are priced differently--fixed fee, contingent on close, etc.--and it works just fine because the range of outcomes is limited and well defined. But neither lawyers nor clients are chumps--billables are often just the best of bad alternatives.

None of that has anything to do with the article's second theme--attempts to control legal services costs through greater differentiation. This is no surprise--it happens in every market. Routine call handling is outsourced to India, routine coughs are handled by GPs rather than pulmonologists, and routine document review is outsourced to lower priced attorneys. These people often do a very good job for their clients in a much more cost effective way--of course clients turns to them. Many charge by the hour--it makes just as much sense for them as for higher priced attorneys. It's a completely different change in our industry, but it has absolutely nothing to do with hourly billing.

Finally, the "billable hours make people work too hard" complaint. Nonsense. Most big firm lawyers work really hard. Many work a lot harder than others--completely understandably--want to work. But that's not because of the pricing mechanism. It's because the legal services industry at the top tier is incredibly competitive. There are many really talented, really driven people competing for the best business. Clients know that, and react accordingly. In fact, I tend to think that the billable hour pricing mechanism actually reduces overall workload by making clients pay more for additional requests. I've worked on fixed fee projects--it's very difficult. The client has no incentive not to pile on more requests--so (rationally) they do.

Because the billable hour strikes many as an archaic and cumbersome pricing method, it is an easy scapegoat for a broad range of complaints from within and without the legal services industry. To be sure, there are sometimes better ways to price--and they are usually found. But I venture that people who don't like working in large firms wouldn't like it any more if there weren't billable hours. Indeed, they'd probably like it less.