New billable hour tracking tools reignite fee debate
Photograph of Justin Lovely by Gene Ho.
Billable hours are a thing of the past for Justin Lovely. It turns out the billable-hours system cost him a lot of valuable time.
“Having to manually input the time for a specific task and then compiling and reviewing at the end of the month took too much time,” says Lovely, a personal injury and DUI attorney in Myrtle Beach, South Carolina. “Also, double-checking to see if the billing was correct or if an attorney or staff member failed to bill for work performed just simply takes time.”
It took 30 minutes to an hour per file when Lovely took into account drafting the bill and associated letters. So for the majority of his clients, he moved to a flat fee and contingency fee structure.
However, new software and cloud-based services have made it much easier for lawyers to keep track of billable hours. For example, Ping, which has won awards for its billable-hours innovation, works in the background and allows users to automatically track and bill their hours, while Amazon’s Alexa tracks time through voice commands. And other tools are providing attorneys with various methods to track their time faster and easier if they choose to continue doing it.
Yet big companies such as Microsoft recently announced they will no longer bill outside lawyers by the hour, pushing the field to a crossroads: Grab hold of the new technology and continue with billable hours or move onto another fee structure.
A DIFFERENT MODEL
The traditional billable model is broken, says attorney C. Stinson Mundy, founder of Linden Legal Strategies in Richmond, Virginia.
Mundy used the billable-hours model when she was at her previous firm. But when she founded her own law firm more than 1½ years ago, she switched to a flat fee. Mundy is about to roll out a subscription billing model, which would allow her clients to reach out to her more often without worrying about getting charged for every email.
“The advancements in technology may help firms be more accountable in their billing and take some of the stress out of recording time. But most law firms are reluctant to embrace technology and are cautious about anything cloud-based, so I can see the legal world being slow to adopt the tech,” she adds.
Not only are lawyers slow to adopt the technology; many have continued to stick with the traditional billable-hours model.
A 2017 study by Aderant reported that an average of 20 percent of law firm client accounts were structured under alternative fee arrangements. Reasons attorneys gave for not switching to an AFA included estimating the time it takes to complete legal work and structuring the AFAs profitably, according to the study.
But the firms are experimenting with the concept. According to a 2016 report by Altman Weil, 97 percent of firms bill at least some of their work on an alternative basis rather than at an hourly rate.
Nevertheless, it’s been difficult for some attorneys to let go of billable hours.
STILL IN STYLE
Umera Ali, a partner at Michelman & Robinson’s Chicago office, says she’s wary of flat fees for specialized work. Most of the time it’s too difficult to estimate how long it will take for the project: Sometimes, something will take 20 hours instead of 10.
“There are two options available: Either to do only 10 hours of work, which means that the work is not of good quality, or the lawyer writes off the time he actually spends doing the work,” says Ali, explaining that this also works in reverse, when it takes less time than expected.
“The only real measure of skilled work is billable hours,” she says.
However, some attorneys are using both methods.
Laura Winston, a partner at Kim Winston in its Yonkers, New York, office, says her firm uses billable hours for some services and flat fees for others.
Preparation of patent or trademark applications, for example, lends itself to flat fee billing. Other services, such as preparing legal arguments that may include spending time on research, are better suited for billable hours, Winston says.
“The billable hour will never go away completely because it’s very reliable,” Winston says.
Winston is taking advantage of the new technology when she does her hourly billing, using a web-based legal tracking and billing program called TimeSolv. It’s designed for lawyers, so the interface is easy to use in terms of creating the records for new clients and tracking time. It also includes a built-in timer.
According to Winston, she can generate an invoice in a matter of a few clicks and can include task codes with TimeSolv. She can also do electronic billing and edit the invoices quickly.
Previously, when Winston was using QuickBooks, it wasn’t as efficient, she says. But now she saves time and money. It’s a total lawyer hack.
This article was published in the March 2018 issue of the ABA Journal with the title "Keeping Time: New tools that help lawyers track billable hours have reignited a debate: Should lawyers move toward nonhourly fee arrangements?"
