Kill the Billable Hour

Apropos of this post the other day about taking the money out of law, Bruce at Adam Smith, Esq. offers some great comments from an economist's perspective on why the billable hour has stuck around, and why it should go away. Bruce's comments are a response to a recent cover story in The Washington Lawyer on The Tyranny of the Billable Hour. That article basically concludes that there's little we can do about the problems of the billable hour, but Bruce protests:

As they say, I respectfully dissent:  The answer—fixed fees, or value billing—is staring us in the face.  We in the profession are too smart not to do better.  As the article drolly notes, even “plumbers and accountants” quote fixed fees.  (And may I point out that firms that have the traction to pursue value billing, a la Wachtell, are not exactly hurting.)  Are we that insecure not to attempt the same? But, you object, the value of legal counsel is ineffable:  Who can put a firm price on it in advance?  The short answer is that, everywhere else in our roiling economy, reasonable people readily agree on “price” vs. “value.”  And I'm not just talking about haircuts and taxi rides:  Is deciding what's a fair price for a home (or, in my case a co-op apartment) simple?  Rationally, there are almost too many factors to consider:  Location, layout, neighborhood, condition, size, design, school district, property tax rates, outdoor space, geographical orientation, “amenities,” etc.  But we quickly arrive at a gut feel, and the home market is highly liquid. The market for legal services does not exist in its own sui generis bubble exempt from all the familiar economic considerations that govern other markets.  It is not a counsel of exceptionalism to think it does, it is a counsel of despair.

Listen to Bruce, brothers and sisters. The truth will set you free UPDATE: More on the billable hour from Yale Law School. [Link via The Prejudicial Effect via Notes from the (Legal) Underground]

Posted January 29, 2005 08:07 AM | 2L law general