The Cuddly Law Firm
[Guest post by DRJ]
Are big law firms kicking the billable hour habit? The New York Times says maybe:
“Over the last few years and, most strikingly, the last few months, law firms have been forced to rethink longstanding ways of doing business, if they are to remain fully competitive.
As chronicled by my colleague Alex Williams in the Sunday Styles section earlier this month, lawyers are overworked, depressed and leaving.
Less obvious, but potentially more dramatic, are the signs that their firms are finally becoming serious about slowing the stampede for the door. So far the change — which includes taking fresh looks at the billable hour, schedules and partnership tracks — is mostly at the smaller firms. But even some of the larger, more hidebound employers are taking notice.
“There are things happening everywhere, enough to call it a movement,” said Deborah Epstein Henry, who founded Flex-Time Lawyers, a consulting firm that creates initiatives encouraging work-life balance for law firms, with an emphasis on the retention and promotion of women. “The firms don’t think of it as a movement, because it is happening in isolation, one firm at a time. But if you step back and see the whole puzzle, there is definitely real change.”
The change varies from firm-to-firm but apparently involves more hourly options and, in some case, the elimination of billable hours:
“At nearly every large American firm, lawyers must meet a quota of hours. During the ’60s and ’70s, the requirement was between 1,600 and 1,800 hours a year or about 34 hours a week, not counting time for the restroom or lunch or water cooler breaks. Today that has risen to 2,000 to 2,200 hours, or roughly 42 hours a week. (Billing 40 hours a week means putting in upward of 60 at the office.)
FACTS is an acronym. Under Ms. Henry’s proposal, work time can be: Fixed (allowing lawyers to choose less high-profile work for more predictable schedules), or Annualized (intense bursts of high-adrenaline work followed by relative lulls); Core (with blocks mapped out for work and for commitments like meeting children at the bus); Targeted (an agreed-upon goal of hours, set annually, customized for each worker, with compensation adjusted accordingly); and Shared (exactly as it sounds).
Ms. Henry’s proposal came at the end of last year, when firms had already started backing away from the billable hour. Some have gone so far as to eliminate it. The Rosen law firm in Raleigh, N.C., one of the largest divorce firms on the East Coast, did so this year, instead charging clients a flat fee.
Similarly, Dreier, a firm with offices in New York and Los Angeles, now pays its lawyers salaries and bonuses based on revenue generation, not hours billed.
At Quarles & Brady, a firm with headquarters in Chicago, not only have billable hour requirements been eliminated, but parental leave has been expanded. Women can now take 12 weeks with pay, men 6 weeks. And that time can be divided, meaning a father can take a few weeks off when his baby is born and a few more after his wife returns to work.
Other firms are making smaller changes. Strasburger & Price, a national firm based in Dallas, announced last October that it was decreasing the hours new associates were expected to log, to 1,600 from 1,920 annually. (Lest you think those lawyers will be able to go home early, however, note that newcomers will now be asked to spend 550 hours a year in training sessions and shadowing senior lawyers.)”
I think ideas like flex-time and flat rate pricing can be better for lawyers and clients. Flat rate pricing makes it easier for clients to budget for legal costs and compare prices among firms. Flex-time makes it easier to retain attorneys beyond 4-7 years. However, I’m sure there will be resistance. After all, lawyers and clients have been talking about this for at least 30 years.
— DRJ
i think that anything that makes life easier for lawyers or makes the craft more attractive is bad for the average lay person.
therefore, i’m against this trend, and think they should consider upping the requirement to a minimum of 50 billable hours a week, plus mandatory on call status for nights, weekends and holidays for all lawyers.
exceptions will be granted for running a blog of popular acclaim in the public interest. %-)
redc1c4 (48a20b) — 1/26/2008 @ 1:10 amA lawyer dies. St. Peter meets him at the Pearly Gates and the lawyer is pretty peeved. “What happened to my promised three score and ten”, he demands. St. Peter says, “Our records show that you are 72 years old”. The lawyer says, “No, I’m only 36”. St. Peter looks again and says, “We’re going by your billable hours”.
nk (eeb240) — 1/26/2008 @ 1:21 am“We’re going by your billable hours”.
Oh my gosh. A lawyer I know is gonna LOVE that joke. On second thought he’s probably heard it :).
no one you know (1ebbb1) — 1/26/2008 @ 6:52 amI have seen a couple of firms abandon similar schemes, not because they did not work but because the firms could not figure out how to supervise. The poor management abilities of many firms is probably the biggest impediment to improvement of the business practices of law firms.
SPQR (26be8b) — 1/26/2008 @ 8:38 amThe last lawyer I worked with in Queens charged just a flat fee, which worked out in my favor due to the deals taking longer than expected. That was pretty good.
meep (b64bd1) — 1/26/2008 @ 9:51 amThat firm that does flat fees for divorces, what exactly IS the fee? Some of the divorces I’ve done, a flat fee of $1,500.00 would have been highway robbery on my part, and others, $1,500.00 would have me working for less than minimum wage. It just doesn’t seem like that’s a feasible alternative for a small firm (two attorneys) like mine. We’d have to set the fee high enough to make sure we didn’t go out of business, which frankly, doesn’t exactly solve all the problems that people have with hourly billing.
Linus (5a109a) — 1/26/2008 @ 12:14 pmSetting the flat fee is the problem, Linus. I agree that some practice areas and/or firms can’t do this but I’ve had experience with it in another practice area.
I think the key is evaluating your past cases to determine how much time and money you generally spent on specific types of cases. For instance, in divorce cases, can you come up with an estimate of what it usually cost to handle a divorce in cases with and without kids? What about cases where assets are more or less than $100,000 or some other arbitrary number? Finally, can you estimate costs in cases where there is a custody agreement vs cases where there is a dispute? I think it’s fine to quote an added fee if litigation becomes necessary.
In other words, you should be able to estimate a flat-rate price scale that takes different variables or combination of variables into account.
DRJ (517d26) — 1/26/2008 @ 12:56 pmYup. A sophisticated client (say insurance adjuster) knows how much he wants to spend on a case. An experienced lawyer has a good idea what the case is worth, too. An appointment for an indigent criminal defendant has a max-out too (although pro bono plays into that).
And then, if you want to keep your client, you cut back on what you bill. Or the opposite. I had a commercial client I could not stand. He called me at home, late in the evening, a few times. I made sure to point out on his statement that I was charging him time and a half for after hours calls. He got himself a new lawyer pretty quick. (But mostly I did not bill my clients for conversations with them. I wanted them to talk to me and I made enough money out of them handling their cases.)
nk (eeb240) — 1/26/2008 @ 1:14 pm“…Women can now take 12 weeks with pay, men 6 weeks…”
Another Drew (8018ee) — 1/26/2008 @ 5:29 pmIsn’t there an equal protection issue here?
How can you give twice the benefit to one employee than you give to another?
Good question. My guess is that both get 6 weeks of parental leave and the woman gets an additional 6 weeks of personal leave to recover from childbirth.
DRJ (517d26) — 1/26/2008 @ 5:31 pmA member of the Canadian Senate is in trouble with the BC Bar Assn. for some creative arithmetic. Among other peccadilloes, she billed a client for 30 hours of work on one day.
Bleepless (730ae6) — 1/26/2008 @ 8:30 pm