Let’s Finally Kill the Billable Hour!?

A lot has been written about the “death of the billable hour”. However, sadly, it’s not dead yet.

In the last year, I’ve made the move from private practice at a large firm to senior counsel at a larger national company. Professionally and personally, it’s been an amazing and challenging transition. One of my responsibilities has been to manage outside counsel and negotiate fee new agreements. It’s a task I’ve found very interesting, particularly given my prior experience on the other side.

From what I’ve seen both in-house and in private practice (and that of a number of colleagues I’ve worked with), the billable hour does not promote efficiency within law firms. If you’ve ever examined a bill from a law firm (or better, analyzed them across multiple law firms), it’s always fascinating to see that different lawyers can take vastly different amounts of time to do a similar task. I’m not impugning the work of any of those lawyers – in my experience, most lawyers are honest about their billing practices. However, the same task, carried out by lawyers of similar experience, should take the same amount of time (or at least cost the same), regardless of the lawyer.

If only billing by the hour, what incentive does a lawyer or law firm have be efficient? I’ve implemented some monthly retainer agreements for general advice and staged fixed-fee agreements for standard litigation (human rights, workers’ comp) to help increase efficiency and predictability (which helps with budgeting). Similarly, blended rates help with with budget predictability and force firms to push work down to the right (more junior) levels, where appropriate.

In my relatively short experience, large law firms won’t offer “alternate fee agreements” (AFAs) without being pushed by their clients. However, once pushed, they can be very inventive. Clearly, there’s a lot more to be said on the subject than can be contained in one blog post.

Have any SLAW readers has similar experiences? Does anyone feel strongly that the billable hour is still a useful and necessary tool?


  1. god

    losing the billable hour would probably cause a deadly aneurysm in the managing partner where I am

  2. One of the difficulties with doing away with the billable hour is that it remains the go to means of accountability when bills are ultimately challenged. Unless clients are willing to actually forego time tracking (and it would be interesting to see if law firms would be willing to do so internally even if the clients did) it is hard to see how all billing arrangements are not going to turn into billable hours in disguise.

  3. I have a similar position and can relate to this entirely. Moving towards a fixed fee is the only way. It encourages the firm to be as efficient as possible so they can move on to the next job.

  4. Stephen Torscher

    In my experience, determining the fee for services that are to be provided on an alternative basis is difficult without reference to an hourly billing rate. In the back of someone’s mind, whether it’s the client, the lawyer or the managing partner, someone is doing the math (hourly rate times hours spent) to determine how the fee quoted compares to the traditional ways.

    It would be interesting to see the results if a large national firm allowed a group of its lawyers to run with an alternative billing model for a period of time. My bet is that despite all of the benefits to both the lawyers and the clients, someone is going to think money’s been left on the table and would push for a return to the old ways.

  5. There isn’t any reason why lawyers can’t have a shop hours book like mechanics do, and charge clients a flat rate for certain work. It can even be scaled based on complexity, so that simple actions attract certain rates and more complicated ones are higher. However, I do not see this happening without intervention from respective Law Societies. What would be useful is if the Law Societies produced some sort of guidelines, so that clients could at least approach a lawyer and propose the amounts for certain tasks. The billable hour wouldn’t necessarily disappear – while it may take 1.5 hours to draft a particular statement of claim, it could be understood that telephone calls and emails are additional to that. But it would certainly create more certainty.

    Probably the most likely spur to such a change would be a revamp of the entire law practice model to encourage smaller firms and sole practitioners, and hence more competition.

  6. Gabriel Granatstein

    There are a lot of good points here:

    1. “Meh”: I agree. It’s been a challenge.. but we’ve been successful.

    2. Robert and Stephen: I think that a baseline can be established using time / billable hours but that selling a service as a product can be really useful. The more it’s done, the more the hour will be become abstract. What is an employment agreement worth? Well.. it depends on the level of the employee and degree of customization. Once you’ve done one, it’s must faster to do more but that doesn’t diminish the worth of the document. $1,000 may be fair even if it only takes 1 hour of someone billing at $250.00. I can think of other examples…

    3. Tommy: I think it would be helpful for firms to be more open about what they’ve done regarding fixed fees. I think it’s a selling point and not something to hide from.

    Thanks for your comments!


  7. Melissa LaFlair


    Thank you for going where many clients will not and pushing your firms for a different model. The fact that many clients don’t push is why numerous well meaning and hard working lawyers continue to practice inefficiently and many clients are dissatisfied with their legal bills.

    To Robert’s point about accountability, the vast majority of the time clients only care about the end result. If clients know up front what they will get (e.g a shareholders’ agreement) and have an understanding as to how much it will cost and how long it will take (say $20k and 3 weeks) based on some general assumptions (e.g. fairly standard terms with little negotiation, one heavy and two light turns of the document and the client will provide clear feedback within two business days of receiving every draft) everyone has all that they need from an accountability perspective. When things start to progress in a manner inconsistent with the assumptions (e.g. the other side is fighting every point) lawyers then need to communicate with their clients to review the implications and options (e.g. if the client is able to intervene and put a stop to the fight without involving the lawyers they will likely prefer that option) and get the client’s OK as to how to proceed BEFORE incurring unexpected costs.

    When the relationship is set up that way, and lawyers thinking about the similarities between files rather than the differences, the billable hour isn’t relevant to the client’s assessment of the lawyer’s effort. While the billable hour may still be helpful from a firm’s internal assessment of productivity and how to allocate resources perspective, that is another matter altogether.

    Happily for my business many clients and firms are realizing the importance of working together to find new ways to approach the delivery of legal services for the benefit of lawyers and their clients.

    Melissa LaFlair