Alt Fees and the Billable Hour (again . .)

Ok so discussing and debating alternative billing (fee arrangements, fee engagements, or whatever phrase one uses to describe anything but billable hours) is not new or novel. Yet recently there has been am uptick in conversation from the likes of legal innovators like Paul Lippe and Jeff Carr (I am realizing I mention them a lot – but for good reason I argue) to bloggers like Mary Abraham and Twitterers like Pam Woldow.

In a recent article written for AmLaw by Paul Lippe, I commented that it was not so much the billable hour but the value of what you get for that fee. Meaning in short, sometimes paying $500+/hr for a lawyer’s time may be well worth it. That has nothing to do with the actual billing metric of the “hour.” Indeed this debate is often more about form over substance and it ought to be substance over form. I do not necessarily care if my law firm charges me x amount of dollars by the hour, minute or some other scheme. I just care that for whatever I am charged I receive equal (if not more) value for that. See more on this at Adam Smith.

Now I recognize that the billable hour has been demonized by many as a vehicle for over padding, inflating or otherwise inaccurately accounting for the total work a firm or lawyers does. However, that speaks more of the firm ‘s ethics rather than the metric of the billable hour. If someone is going to cheat you, they will find a way.

This brings into light another blog entry by Mary Abraham that has experienced a lot of debate in the last few days. In her September 1st entry, Mary discussed an Australian firm’s technology that allows for greater transparency into its workflow and work product. The debate on-line has been centered on just what level of transparency is needed within the practice of law. Some argue that all the client should see is the end product. While others argue that there should be no more “man behind the curtain” and that firms should open up their practices and work product creation to their clients. Regardless of which argument one makes I will state that any tool a firm can offer that allows this type of transparency is a great thing for the industry. Clients in the end will determine if they want to use it or not. Any time a firm can offer a client something new, innovative, and unique – the client can choose to take advantage of it or not depending on its own culture and practices.

The billable hour has often been seen as a cloak for firms to hide much of the particulars about what they do. Flat fee can be no different in many ways. The only true method a client can use to determine whether they are receiving value for fees is to know more about exactly what the firm did and how it did it. Then the clients can make the determination themselves. This new technology can certainly help. And that is a good thing.
Joshua Kubicki1 Comment