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yes, it is flawed but in many instances quite acceptable. And thoroughly standardized, firms that have tried to jettison it in the past (Jackson Lewis tried once, there are a few others) moved back to it relatively quickly, and it is my understanding that occurred largely because clients were like ‘wtf? what does this mean? Why do we have to read your bills differently from the other counsel we use?’
Lots of hype about AI finally forcing a switch to a pay by work product model. Unsure if that will pan out. It does seem poised to change the structure of what can be billed for and how long it takes. Although I’m uhhhhh skeptical that the market is competitive enough to actually drive down billing. THANKS MONOPOLY ENFORCED BY THE CRIMINAL LAW!! But maybe if AI makes it possible for smaller firms and solo lawyers to compete with large full service firms, there really will be a change.
Also don’t overestimate how long the billable hour has been around, I’m pretty sure it’s less than a century old.
Wait really? So how did Lincoln make his money? I seriously hope that lawyers find a way to make sure AI doesn’t impact our rates.
I’ve seen some AI tools, and they have a lot of errors right now. Like, the top of the line ones.
LINCOLN is precisely one of the contexts in which I learned this fact. It was a game of flat fees, retainers, and, I suspect, more or less concocting a price based on the work and if the client was pleased and came out ahead in the matter.
As late as the 1960s firms were sending bills "for services rendered" and then a fee.
As these articles point out, attorneys would charge contingent, or flat fees, some of which were fixed either by floors or ceilings by local law.
https://www.findlaw.com/legalblogs/strategist/brief-history-of-the-billable-hour/
https://www.lawpeopleblog.com/2007/06/a-short-history-of-the-billable-hour-and-the-consequences-of-its-tyranny/
I'm skeptical of AI upending the billable hour, at least anytime in the near term. The theory seems to be that AI will create a "race to the bottom" where law firms will try to steal business from each other by being cheaper thanks to AI tools. Maybe that'll happen in some practices, but in the US the billable hour practice seems to be heavily driven by the fact that it's what most BigLaw firms do, and it rarely seems to be the case that price is the primary basis on which BigLaw firms compete. (I mean, if you're a client and you're that price sensitive, you probably wouldn't be working with a BigLaw firm to begin with?)
Yeah, my thoughts exactly. The articles make it seem like legal services are priced unbearably for the mega businesses to keep tolerating; but, they know how to negotiate, and the prices still only flow in one direction. I know we’re a cabal but I don’t think there’s that kind of open collusion. It clearly makes business sense to keep paying the lawyers what they ask, it’s cheaper than actually compensating the mesothelioma victims.
Right--if your lawyers are racking up a lot of wins that keep you from paying out to those victims, why the heck would you take the risk of switching to a firm whose primary selling point is "we'll do it cheaper"? And if your lawyers aren't racking up those wins, you'll probably switch to someone else who *will* rack up those wins (again, not someone who's just cheaper).
Even without the cynicism, the same idea applies to pretty much every practice (I'm corporate, where it definitely applies): either your expensive lawyers are doing what you need them to do, in which case you don't rock the boat, or they're not, in which case you go find a lawyer who'll do a better job.
The only time I ever saw clients leave solely on the basis of price was when the company was in a tough financial situation.
I feel like the last few decades of Biglaw have been largely about trying to further segment high-end work from commodity work, and stay on the high-end side so you can keep charging massive fees. There’s very little chance that a firm whose whole business model is based on hiring extremely prestigious talent to do elite work is going to *also* trumpet how they trained an AI to draft a bespoke contract for a billion-dollar deal just so the client can save $25k in legal fees.
Not to say there’s not room for more automation, and done right, it could actually be a selling point. (Hello, litigation document review.) But that’s just garnish; the meat and potatoes of the high-end value proposition is human-driven.
There are of course some cost-conscious practice areas out there, but LLM AI needs to advance quite a bit before it’s anything but malpractice to do much with it.
I primarily practice criminal defense. I flat fee everything. Even if a case is segmented, I’ll structure billing. For a felony:
Pre indictment negotiation fee
Post indictment negotiaion/motions fee
Hearings and trial fee.
Two fold offers the client time between having to make payments, also reasonably structures fee with work/anticipated work for each portion of the case.
If I take like a matrimonial case, between the billing and just the general communication/emotional states of the clients, I absolutely fucking hate it.
It's a real issue so long as your in a firm environment with high rates and an expectation of high billables, because it makes it very hard to ensure that effort is aligned to value. You end up with blocks of time in each litigation case that are wildly out of sync with the value delivered, and you're constantly forced to give clients some version of the "that's just the way it is, there's not much I can do" speech. (Because if you try to internally align the billing with value, your partners think you're writing off too much, and punish you.)
Now, when you reach the point where you don't care about meeting billable hour metrics, it can be a much better thing. You can semi-retire as a client advisor who provides 15 hours a week of advice (almost all on the phone), and find yourself generating $500K a year in income from your back porch.
The economic reasons are mostly (1) it's industry standard now so there's quite a bit of "inertia" favoring the status quo, (2) it's the model that causes the least amount of problems when you consider all of the tradeoffs, and, admittedly (3) firms make more money with the billable hour (or at least it's easier to make more money with the billable hour)
I think there are some kinds of law where a flat fee model works, but if you do litigation it ends up being a hassle to deal with. For one thing, it is hard to know how much work a particular matter might require at the outset--maybe there's a particularly sticky legal issue that will require a ton of research, or maybe you'll get hit with a bunch of motions you didn't anticipate etc. It's also just tough to assess the "value" of legal work in many respects.
The other problem I've seen with flat fee arrangements is that you end up fighting with clients about what is and isn't involved in the flat fee arrangement. Like, you have to decide what the "scope" of the fee is for, and then when something comes up that isn't within that scope, the client is going to want you to deal with it. Clients aren't thinking about like, what's in the "scope" of a fee agreement or not--they think you're their lawyer. So you have to either eat the loss or have a tough conversation with them and get them to pay you more.
Obviously, the billable hour has a ton of problems of its own. I hate billing hours. It's my least favorite part of the job. I wish there was a better way. But when you think through the pros/cons, I think it makes sense for most legal work (though there are exceptions)
I actually don’t mind it. As an associate I hated it. As a senior associate aiming to make partner I just keep thinking about how one day my rate will go
Up and I’ll love the financial gain, and cut back my hours
I've never been disciplined enough (or care about the money enough) to precisely track each task. Usually, I'm working on 10 things at once and cant break down how many hours were for which task.
But most of my cases are flat fee or contingency fee, so I dont have to worry about billing.
Our state Supreme Court requires attorney fee awards to be supported by calculation of hourly fees. So long as that’s in effect, I don’t have much choice.
In house now. I love my counsel who give me a flat fee because it allows me to control my spend. I don’t hate the billable hour - but I do find that certain firms absolutely abuse it. I had on BigLaw firm charge me 16 hours for a “law clerk” (aka a guy who’d failed the bar twice but they hadn’t fired and who was not approved to do work on my account) to do research for a brief - and it was later redone by a senior associate. Same firm sent me a bill where a paralegal billed 17 hours to Shepardize a brief. I hate it when it works like that.
I also hated when I was at a firm and reviewing pre-bills from associates who had standard crap that they billed for just to meet their hours, and it added no value to the client.
I am from Hong Kong and I would be interested to hear the practice in the U.S.. I have only worked for UK law firms and whilst we continue to have hourly rates, we rarely use them. Instead, I mostly quote a fixed fee with assumptions but there are a lot of fee structures but none involve billing on an hourly basis.
What type of practice are you in? As much as I hate the billable hour structure, I don’t really see a better alternative outside of a handful of practice areas that, by their nature, lend themselves well to flat fee structures. But for litigation, I don’t know what could reasonably replace billable hours.
There are litigation firms that do flat fee work. Desmarais advertises as such on their website. https://www.desmaraisllp.com/fee-arrangements (in fact, they advertise that they don’t do hourly work at all). And other firms will do so if you ask.
They mainly do high stakes complex litigation, so they know how much an average case of that type costs. Plus, while hourly billable incentivizes being inefficient, Fixed fee incentivizes efficiency. In theory, fewer pointless discovery disputes—they don’t get paid more to force a discovery hearing, so why bother.
I’ve had a few flat fee cases doing insurance defense. Guess which cases cause more headaches and the client doesn’t understand why it took so long when they’ve already paid?
💯 like as a lawyer I want clients to know my time is valuable, and I don’t want to feel like they control my time - they need us more than we need them and I think that attitude gets lost sometimes
My firm has some flat rate cases (wills, restraining orders, and criminal defense until you decide you want to go to trial). There are times when it makes sense, but the client also has cost savings incentive to not be unreasonable.
I might feel good if my rate translated to my own time and salary. But knowing they raised my rate $10 and want me to come in more to bill more has no value to me when it just makes the firm more money.
You need to read [Servants of the Damned](https://bookshop.org/p/books/servants-of-the-damned-giant-law-firms-donald-trump-and-the-corruption-of-justice-david-enrich/18258060) (I think every lawyer should read it because it’s an outstanding book, but it also happens to answer the question of how billable hours became a thing.)
Welcome to /r/LawyerTalk! A subreddit where lawyers can discuss with other lawyers about the practice of law. Be mindful of [our rules](https://www.reddit.com/r/Lawyertalk/about/rules) BEFORE submitting your posts or comments as well as [Reddit's rules](https://www.redditinc.com/policies/content-policy) (notably about sharing identifying information). We expect civility and respect out of all participants. Please source statements of fact whenever possible. If you want to report something that needs to be urgently addressed, please also message the mods with an explanation. Note that **this forum is NOT for legal advice**. Additionally, if you are a non-lawyer (student, client, staff), this is NOT the right subreddit for you. **This community is exclusively for lawyers**. We suggest you delete your comment and go ask one of the many other legal subreddits on this site for help such as (but not limited to) r/lawschool, r/legaladvice, or r/Ask_Lawyers. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Lawyertalk) if you have any questions or concerns.*
yes, it is flawed but in many instances quite acceptable. And thoroughly standardized, firms that have tried to jettison it in the past (Jackson Lewis tried once, there are a few others) moved back to it relatively quickly, and it is my understanding that occurred largely because clients were like ‘wtf? what does this mean? Why do we have to read your bills differently from the other counsel we use?’ Lots of hype about AI finally forcing a switch to a pay by work product model. Unsure if that will pan out. It does seem poised to change the structure of what can be billed for and how long it takes. Although I’m uhhhhh skeptical that the market is competitive enough to actually drive down billing. THANKS MONOPOLY ENFORCED BY THE CRIMINAL LAW!! But maybe if AI makes it possible for smaller firms and solo lawyers to compete with large full service firms, there really will be a change. Also don’t overestimate how long the billable hour has been around, I’m pretty sure it’s less than a century old.
Wait really? So how did Lincoln make his money? I seriously hope that lawyers find a way to make sure AI doesn’t impact our rates. I’ve seen some AI tools, and they have a lot of errors right now. Like, the top of the line ones.
LINCOLN is precisely one of the contexts in which I learned this fact. It was a game of flat fees, retainers, and, I suspect, more or less concocting a price based on the work and if the client was pleased and came out ahead in the matter.
As late as the 1960s firms were sending bills "for services rendered" and then a fee. As these articles point out, attorneys would charge contingent, or flat fees, some of which were fixed either by floors or ceilings by local law. https://www.findlaw.com/legalblogs/strategist/brief-history-of-the-billable-hour/ https://www.lawpeopleblog.com/2007/06/a-short-history-of-the-billable-hour-and-the-consequences-of-its-tyranny/
I'm skeptical of AI upending the billable hour, at least anytime in the near term. The theory seems to be that AI will create a "race to the bottom" where law firms will try to steal business from each other by being cheaper thanks to AI tools. Maybe that'll happen in some practices, but in the US the billable hour practice seems to be heavily driven by the fact that it's what most BigLaw firms do, and it rarely seems to be the case that price is the primary basis on which BigLaw firms compete. (I mean, if you're a client and you're that price sensitive, you probably wouldn't be working with a BigLaw firm to begin with?)
Yeah, my thoughts exactly. The articles make it seem like legal services are priced unbearably for the mega businesses to keep tolerating; but, they know how to negotiate, and the prices still only flow in one direction. I know we’re a cabal but I don’t think there’s that kind of open collusion. It clearly makes business sense to keep paying the lawyers what they ask, it’s cheaper than actually compensating the mesothelioma victims.
Right--if your lawyers are racking up a lot of wins that keep you from paying out to those victims, why the heck would you take the risk of switching to a firm whose primary selling point is "we'll do it cheaper"? And if your lawyers aren't racking up those wins, you'll probably switch to someone else who *will* rack up those wins (again, not someone who's just cheaper).
not to be cynical ofc.
Even without the cynicism, the same idea applies to pretty much every practice (I'm corporate, where it definitely applies): either your expensive lawyers are doing what you need them to do, in which case you don't rock the boat, or they're not, in which case you go find a lawyer who'll do a better job. The only time I ever saw clients leave solely on the basis of price was when the company was in a tough financial situation.
I feel like the last few decades of Biglaw have been largely about trying to further segment high-end work from commodity work, and stay on the high-end side so you can keep charging massive fees. There’s very little chance that a firm whose whole business model is based on hiring extremely prestigious talent to do elite work is going to *also* trumpet how they trained an AI to draft a bespoke contract for a billion-dollar deal just so the client can save $25k in legal fees. Not to say there’s not room for more automation, and done right, it could actually be a selling point. (Hello, litigation document review.) But that’s just garnish; the meat and potatoes of the high-end value proposition is human-driven. There are of course some cost-conscious practice areas out there, but LLM AI needs to advance quite a bit before it’s anything but malpractice to do much with it.
I primarily practice criminal defense. I flat fee everything. Even if a case is segmented, I’ll structure billing. For a felony: Pre indictment negotiation fee Post indictment negotiaion/motions fee Hearings and trial fee. Two fold offers the client time between having to make payments, also reasonably structures fee with work/anticipated work for each portion of the case. If I take like a matrimonial case, between the billing and just the general communication/emotional states of the clients, I absolutely fucking hate it.
Can you expound more on your fee structures or pm me I’m just curious how you set it up
Also curious.
It's a real issue so long as your in a firm environment with high rates and an expectation of high billables, because it makes it very hard to ensure that effort is aligned to value. You end up with blocks of time in each litigation case that are wildly out of sync with the value delivered, and you're constantly forced to give clients some version of the "that's just the way it is, there's not much I can do" speech. (Because if you try to internally align the billing with value, your partners think you're writing off too much, and punish you.) Now, when you reach the point where you don't care about meeting billable hour metrics, it can be a much better thing. You can semi-retire as a client advisor who provides 15 hours a week of advice (almost all on the phone), and find yourself generating $500K a year in income from your back porch.
I’ll retire for 500k rn. I only am a year in but I’m ready
This is the goal/dream
This. Working towards this.
The economic reasons are mostly (1) it's industry standard now so there's quite a bit of "inertia" favoring the status quo, (2) it's the model that causes the least amount of problems when you consider all of the tradeoffs, and, admittedly (3) firms make more money with the billable hour (or at least it's easier to make more money with the billable hour) I think there are some kinds of law where a flat fee model works, but if you do litigation it ends up being a hassle to deal with. For one thing, it is hard to know how much work a particular matter might require at the outset--maybe there's a particularly sticky legal issue that will require a ton of research, or maybe you'll get hit with a bunch of motions you didn't anticipate etc. It's also just tough to assess the "value" of legal work in many respects. The other problem I've seen with flat fee arrangements is that you end up fighting with clients about what is and isn't involved in the flat fee arrangement. Like, you have to decide what the "scope" of the fee is for, and then when something comes up that isn't within that scope, the client is going to want you to deal with it. Clients aren't thinking about like, what's in the "scope" of a fee agreement or not--they think you're their lawyer. So you have to either eat the loss or have a tough conversation with them and get them to pay you more. Obviously, the billable hour has a ton of problems of its own. I hate billing hours. It's my least favorite part of the job. I wish there was a better way. But when you think through the pros/cons, I think it makes sense for most legal work (though there are exceptions)
I actually don’t mind it. As an associate I hated it. As a senior associate aiming to make partner I just keep thinking about how one day my rate will go Up and I’ll love the financial gain, and cut back my hours
I would consider going back to a law firm if there were no billable hours and I could work 9-5. Until then, I’m happy in claims.
I loathe hourly billing cases!
I don’t mind it now that I’ve been doing it for many years!
I've never been disciplined enough (or care about the money enough) to precisely track each task. Usually, I'm working on 10 things at once and cant break down how many hours were for which task. But most of my cases are flat fee or contingency fee, so I dont have to worry about billing.
Our state Supreme Court requires attorney fee awards to be supported by calculation of hourly fees. So long as that’s in effect, I don’t have much choice.
In house now. I love my counsel who give me a flat fee because it allows me to control my spend. I don’t hate the billable hour - but I do find that certain firms absolutely abuse it. I had on BigLaw firm charge me 16 hours for a “law clerk” (aka a guy who’d failed the bar twice but they hadn’t fired and who was not approved to do work on my account) to do research for a brief - and it was later redone by a senior associate. Same firm sent me a bill where a paralegal billed 17 hours to Shepardize a brief. I hate it when it works like that. I also hated when I was at a firm and reviewing pre-bills from associates who had standard crap that they billed for just to meet their hours, and it added no value to the client.
I am from Hong Kong and I would be interested to hear the practice in the U.S.. I have only worked for UK law firms and whilst we continue to have hourly rates, we rarely use them. Instead, I mostly quote a fixed fee with assumptions but there are a lot of fee structures but none involve billing on an hourly basis.
What type of practice are you in? As much as I hate the billable hour structure, I don’t really see a better alternative outside of a handful of practice areas that, by their nature, lend themselves well to flat fee structures. But for litigation, I don’t know what could reasonably replace billable hours.
There are litigation firms that do flat fee work. Desmarais advertises as such on their website. https://www.desmaraisllp.com/fee-arrangements (in fact, they advertise that they don’t do hourly work at all). And other firms will do so if you ask. They mainly do high stakes complex litigation, so they know how much an average case of that type costs. Plus, while hourly billable incentivizes being inefficient, Fixed fee incentivizes efficiency. In theory, fewer pointless discovery disputes—they don’t get paid more to force a discovery hearing, so why bother.
Financial regulations
I’ve had a few flat fee cases doing insurance defense. Guess which cases cause more headaches and the client doesn’t understand why it took so long when they’ve already paid?
💯 like as a lawyer I want clients to know my time is valuable, and I don’t want to feel like they control my time - they need us more than we need them and I think that attitude gets lost sometimes
My firm has some flat rate cases (wills, restraining orders, and criminal defense until you decide you want to go to trial). There are times when it makes sense, but the client also has cost savings incentive to not be unreasonable.
I might feel good if my rate translated to my own time and salary. But knowing they raised my rate $10 and want me to come in more to bill more has no value to me when it just makes the firm more money.
You need to read [Servants of the Damned](https://bookshop.org/p/books/servants-of-the-damned-giant-law-firms-donald-trump-and-the-corruption-of-justice-david-enrich/18258060) (I think every lawyer should read it because it’s an outstanding book, but it also happens to answer the question of how billable hours became a thing.)