Why the Billable Hour Gets a Bad Reputation!

“THAT bill shall know no limits,” wrote one DLA Piper lawyer to another in 2010 in what the firm is now calling “unfortunate banter” between associates about work for a client. But , according to  an article by Steven J. Harper of the New York Times,  “what is truly unfortunate is the underlying billable-hour regime and the law-firm culture it has spawned.”
In a typical large firm, associates earn far less than revenues generated. A client gets an invoice totaling the number of hours each lawyer spends on the client’s matters, multiplied by the lawyer’s hourly rate, perhaps $400 for a junior associate. Most big firms require associates to bill at least 1,900 hours a year, according to a survey last year by NALP, the Association for Legal Career Professionals. You can do the math about how much the associate generates in revenue; however, I KNOW that that there are NO associates billing $400 in North Louisiana unless it’s a very unusual SEC-complex dispute.
The average hourly rate for SENIOR trial attorneys defending personal injury claims is not even one third of the hourly rate charged by an associate in New York, Houston, or New Orleans. Yet, because of the greed of a few, we ALL suffer from the bad reputation. Yet, Mr. Harper continues:

” A 2011 survey by ALM Legal Intelligence, an online data service, found that alternative fee arrangements accounted for only 16 percent of revenues at the nation’s largest law firms in 2010. Despite outcries for reform, the billable hour remains entrenched and the barriers to change are formidable.”

” While at a big firm, Webster Hubbell, a former Arkansas Supreme Court justice and associate attorney general for President Bill Clinton, was caught billing clients for time that he never worked. He went to prison. A partner in a prominent Chicago law firm got into trouble when someone wondered how he could bill almost 6,000 hours annually over four consecutive years. He couldn’t.”

“There’s a way out of the mess. But it requires clients to press harder for alternative fee arrangements, courts to back away from policies that embed the billable hour, law firm leaders to stop rewarding excessive associate hours and senior partners to consider the deleterious consequences of their myopic focus on short-term profit-maximizing behavior.”

I agree with these points, but what IS the alternative billing arrangement? I can see that in SOME standard auto insurance cases, that there are routine tasks that can be billed at standard project rate, but many of the cases I handle are catastrophic and require much more work. Even the ones that are not, may require extensive work because of the potential risk of substantially high-dollar claims.
I can imagine that IF certain tasks were not done, and the value of the case exceeded expectations, then the client would be arguing that the lawyer SHOULD have done more. No matter if the client didn’t want to PAY for the additional efforts! 
No matter what is done, there are those who will be greedy and find ways to gouge the system. It then causes the attorney who is truly trying to do the right thing to be “caught in the net” and suffer the consequences.  Economic freedom without a moral code will always produce greed. There must be a “heart change” to prevent greed.
The problem with completely doing away with the billable hour is that it could also cause lawyers to cut corners rather than fully defending the client. For example, if an attorney was only getting paid a set fee, would he do all he should to find underlying issues? Would there be an aggressive search of past medical information, surveillance, interviews, motions for summary judgment and other battles over legal issues?
Agreed, the attorney SHOULD get permission before doing more than is allowed under the billing guidelines. However, the client should also allow for necessary work to ensure an adequate defense. Don’t require the attorney to call and get approval for every minor exception or objection. It is inefficient. Don’t work with the BIG FIRMS only. Smaller firms, like us, often can do more with less.

Not every case requires that there be a battle over every issue, but one needs to be prepared to fight the battle and fully defend the client. Recently, I was chastised by a client for charging more in defense costs than the case settled; however, the adverse party started at a very high unreasonable number and I had to find the information that would convince them that they were not going to get what they wanted.
How did I do that? I didn’t charge for unnecessary work. In fact, I discounted the bill if I felt that more time than should have taken on a particular task; however, we had to:

-respond to motions to compel;
-issue motions to compel;
-obtain medical records via subpoena, which requires more time than just getting a release;
-there are always records and treatment that the plaintiff does not reveal so we had to obtain that information indirectly by pharmacy records or insurance records;
– there were issues with Medicare that had to be resolve;
-there was a battle over documents that the client didn’t want to reveal so I had to draft protective order, respond to motion compel and argue the case in court;
-our insured defendant had to be deposed and prepped for deposition;
-there were others who were NOT injured in the accident and they had to be deposed;
-obviously the plaintiffs had to be deposed;
-the treating physician had to be deposed and he was GREAT for us, but not if I had not prepared and been ready for issues to cover with him;
-then we mediated the case and much time was necessary to prepare for the case.
This is NOT necessary in all cases. In fact, I am working on settling a case right now without even answering the petition (under an extension) and NO discovery, so there are plenty of times that I don’t prepare as extensively in every case, but without some incentive to do what is necessary, would all that should be done BE done?
By the way, the average hourly rate for defense lawyers handling personal injury claims is at least, one-half the hourly rate of other litigators. Gouging happens and it’s abhorrent, but not to the point of completely eliminating the hourly rate. 
At least that’s the way I see it.
I would like your opinions here or directed to me at:
perkins@perkinsfirm.com. In the meantime, if there is anything I can do for you, please don’t hesitate to call day or night.
Mark Perkins
Perkins & Associates, LLC
401 Market Street, Suite 900
Shreveport, LA 71101
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