Rethinking the Billable Hour – I of II – Is It Efficient?

This is the first in a two-part series on the billable hour, to give you an idea of which viewpoints are being bandied about as well as what other forms of billing are being utilized.  

Today we’ll tackle the subject from the point of view of the blog Stay of Execution, written (at the time) by a Big Law associate who, while she was practicing, claims she felt inefficient under the billing system.  Then we’ll check out the information that was part of an April 2011 Yale Law School Career Development Office handout.  

So the SoE blog author starts out clucking good-naturedly: “You know, of course, that it’s sort-of taboo to ask a practicing lawyer to discuss billable hours, don’t you? Or maybe it isn’t and it just feels that way to me. It’s like asking someone their salary. It’s a yardstick that I know someone will judge me by.”  The author then proceeds to talk about how she knows she’s going to be perceived as a slacker as she’s only billed 7.5 for that day; she’ll probably end up billing a total of 8.  How did  that happen?  

Well, the lawyer got in before 8 a.m. and felt, since she had e-mails to answer, and “administriva” to tend to, that she could safely start billing at 9 a.m.  Then there were all those non-billables: that administrative assistant day do to attend, some networking (okay, gossiping with staff), a personal phone call and errand, and all those sorts of interruptions that one encounters during a typical work day.  “It takes me 10 hours to bill 7 to 8 hours,” she says.  

Another concern: at the end of 2 ½ hours of working on a project, she’s been through “half a dozen blind alleys” and written down maybe half a paragraph of “tepid conclusions”.   “Do you bill that 2 ½ hours?  On the one hand, great…that’s a nice big chunk of change,” she says. On the other hand, she suddenly realizes that those who look over her work will wonder why it took her so long to do such a simple task…and she’s still not finished.   “Maybe you should only write down 1 hour. But where are you going to get the other 1.5 hours?”  

OK, we get the picture.  Now on to Yale Law School. What do they have to say in “The Truth About The Billable Hour”?   The piece starts off by warning that it’s nearly impossible to avoid the billable hour, and reiterates the old saw that: “Most law firms make their money by billing their clients by the hour.” Then, in no uncertain terms, the equation is laid out: you must not only cover your salary and overhead, but, in order to be profitable for the firm, you must also bring in revenue. It’s simple math. Salary + Overhead + Revenue = Keeping Your Job.  They give a likely workday estimate as one where you’ll be working 12 hour days but billing 8 1/2.

How many billable hours are required? “Not all law firms have the same emphasis on billable hours.  Public interest law firms, smaller law firms and law firms outside of large metropolitan areas often require less billable hours and may place more emphasis on training, client development, community related activities and the like.”    

Government and public-interest “bosses” don’t have any billable hours as they don’t bill in that manner.  “Finally, in the current economic climate, some firms are struggling to keep their associates busy and billable hour concerns are taking a different turn.”  

To see what a typical work schedule can ostensibly look like, you can use Yale’s “online work life balance calculator” at http://www.envoyglobal.net/jdbliss/test/calculator2.htm. Stay tuned for more on the billable hour.  

To read the SoE blog, go here: http://civpro.blogs.com/civil_procedure/2004/04/billable_hours.html  

For the Yale handout, go here: http://www.law.yale.edu/documents/pdf/CDO_Public/cdo-billable_hour.pdf

-EM

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