Bye Bye Billables?

The billable hour model has strong roots in the legal industry, dating back to the 1960s. While the billable hour still has its place with certain legal matters, it does not take into account the value of the legal matter or the results achieved. Because the billable hour charges for time and not results, the attorney's incentive could appear to be in direct conflict with the client's goal. Furthermore, there's no incentive for a law firm to invest in technology or to try to improve efficiency because any improvements could reduce the hours spent working on a case. Last, but not least, take into consideration the unproductive time spent reviewing, justifying and adjusting bills and it's understandable that corporate counsel and attorneys alike are interested in exploring alternatives.

The American Bar Association (ABA) recently weighed in on the issue by forming a commission to study the impact of the billable hour on the legal profession's goal of providing the best legal services and to explore alternative compensation models. The Commission's stated goal was to 'initiate serious debate that will lead to innovation that addresses the flaws in the current standards.' The commission's resulting report, The ABA Commission on Billable Hours Report, suggests that while the billable hour is appropriate for some legal activities or work, finding alternative compensation models encourage efficiency and the quick resolution of legal matters are critical to the profession. (The complete ABA Commission on Billable Hours Report can be accessed online at www.abanet.org/careercounsel/billable.html.)