Letters to the Editor

The Billable Hour Won’t Die

Posted Oct 1, 2007 2:41 PM CDT

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Regarding “The Billable Hour Must Die,” August: There is another aspect to the issue that is not so apparent. As a lawyer rendering services dealing with people problems, not corporate problems, I see this issue in another context, with ramifications of client dissatisfaction and misunderstanding that are considerably different.

These are people who can pay only a limited amount, often for services that by any measure of reasonableness will far exceed their capacity to pay. They don’t ask what the service will cost. They only ask how much up front, which in their interpretation of things should cover the entire service. Additional fees usually go unpaid because clients either can’t pay or feel they should not have to.

I now try to weave in a value-billing concept in initial fee discussions. I ask how much it is worth to them, or how much they can pay or are willing to pay. If we can agree on a value to them and a scheme of payment I can live with, I try to work within that framework.

However, clients’ concepts of value are usually based on unrealistic hopes and a quick and easy solution to the problem, so frequently I cannot take the matter because I cannot fit the anticipated services within their expectations and financial abilities. I try to help as much as I can but only on a limited or informal basis. If it is unlikely I can do anything for them on the cheap, I have no choice but to reject the case and tell them that they are asking for something they can’t afford.

Unfortunately, value-billing policies like these tend to leave clients, whose work I once took, without legal services for which I used to collect fees later on. But at least it tends to avoid for me the bad publicity of perceived fee overcharges and bad feelings and losses, which are unavoidable when the cost of the service exceeds what the client expects.

Levi H. Goossen
Newton, Kan.


The most important point of Scott Turow’s article was buried in the midst of long-standing criticisms of hourly fees. A lawyer should always offer a client appropriate alternative fee options and let the client choose a method that best meets the client’s needs.

Many of my clients cannot afford a flat fee but can afford an hourly rate paid over a period of time when given an estimate of the cost and regular detailed billing statements. Any billing arrangement is subject to abuse by an attorney who does not treat the client fairly. When used appropriately, hourly fees can be fair to both parties and are no more flawed than any other type of compensation.

William E. Cannon Jr.
Waynesville, N.C.


Being a lawyer, I have to point out the flip side of Turow’s assertion that billing by the hour results in an inherent conflict of interest, encouraging unnecessary work to increase fees. It is just as logical to argue that billing a flat rate for legal work creates an incentive to do less than zealous work, to cut corners, to encourage a client to settle when it may be in the client’s best interest to continue negotiating or go to trial, and so on. The fact is, some attorneys will provide good representation for reasonable fees, and some will not—no matter what fee arrangement is agreed upon.

As a sole practitioner, I’m able to set my own rules. I charge by the hour almost 100 percent of the time, which often works to the benefit of my clients. Of course, I am busy enough (also being a part-time public defender) that I simply don’t have time to do extra work just to ratchet up fees.

On the other hand, if I have a “needy” or demanding client, who calls me all the time, I remind myself that the client is paying for my time, and at least I am earning money while spinning my wheels.

Finally, I can and do adjust my bills by not charging for all my time if I think the fees are getting unreasonable or I know my client will have difficulty paying. And yes—I have frequently sent refunds of unearned fees when the total cost was less than the initial retainer.

Ramona C. Lackore
Willmar, Minn.


The song of “killing” the billable hour continues to be played over and over. But, other than some notable exceptions, few have the guts to do something about it. How do we know? By experience. Our firm has been pushing alternative fee arrangements and client risk-sharing partnerships since 1987. Clinically and statistically, we have shown the success and economic value of such arrangements.

However, the insurance industry wants to “talk” about alternative fees, but lacks the will to share risk and, potentially, rewards with their lawyers. It is primarily a few of the self-insured purchasers of legal services who are willing to experiment with alternative fees and build up a model for experience and metrics. Certainly, there is enough blame to go to the lawyers, but it is the clients that drive the legal marketplace.

Mario C. Ciano
Cleveland


Turow’s article reminded me of this conundrum about billing by the hour: If a general contractor can give a client a fixed price for a project that will take four months and involve dozens of subcontractors and workers, shouldn’t a lawyer be able to give a fixed price for a project that will take one person two days?

Dean N. Alterman
Portland, Ore.

CORRECTION

A sentence in “Accounting for Lives,” September 2007, incorrectly suggests that Donald W. Good­rich, chair of Families of Sep­tember 11, holds the view that same-sum-for-all payments for non­eco­nomic damages by the Sep­tem­ber 11th Victim Compensation Fund devalued the lives of older victims. In fact, Goodrich says the fund’s formula undervalued the lives of younger victims.

The Journal regrets the error.

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