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Law Practice Management

Billable Hour Hullabaloo is ‘Overblown,’ Drinker Partner Says

Posted May 21, 2009 2:30 PM CDT
By Rachel M. Zahorsky

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The law firm paradigm is transforming. The billable hour is dead. The legal landscape as we know it will continue to shift in the coming months, consultants and industry experts say.

Or, maybe not.

Last week, we reported on a recent survey that said most law firm leaders aren’t quickly embracing drastic management overhauls. Other partners we spoke to say tried-and-true law firm models aren’t going down without a fight.

“The billable hour is an overblown issue,” said Drinker Biddle & Reath managing partner Ed Getz, in an interview with the ABA Journal. Getz, who is regional partner in charge of the firm’s Chicago office, said clients are more focused on capping total fees and increasing their input on attorney staffing than abandoning the rate-multiplied-by-time standard. “There’s not as much movement away as you would think.”

While demand for projected monthly rate totals on matters has increased due to tighter outside counsel budgets, the billable hour remains a familiar and comfortable billing mode for clients, he added.

Plus, Getz questioned whether firms that have made precipitous attorney and staff cuts might end up ill-equipped when the markets begin to recover. “If firms are too draconian in adjustments,” he warns, “they might not be prepared when the economy shifts.”

That's not to say that there's room for improvement.

“Is the economy a firm-model changing event?” asked Bryan Schwartz, a founding partner and chairman of Chicago-based Levenfeld Pearlstein, “I certainly hope so.”

However, Schwartz, who bills himself as a businessman who happens to be a lawyer, expressed frustration at getting clients, and some lawyers, on board with change. “Clients still can’t break away from hourly billing,” Schwartz said in a recent interview.

Instead of using knowledge and experience to determine what they should be paying for outside legal services, and bringing those estimates to the table, Schwartz said many in-house clients remain transfixed by asking for discounts on hourly rates.

“In-house lawyers should know what things cost,” Schwartz said. “The onus is on the clients and the law firms,” to ensure work is performed efficiently, he added.

Although Schwartz says the climate is right to streamline the entire legal industry, he also remains doubtful change will come easily. “The problems are so pervasive that, if made, the change required is phenomenal.”

Arthur Hahn, the national chair of Katten Muchin Rosenman’s financial services practice, said his firm will continue to increase associate training and invest in technology to increase value to clients. But, the democratic partnership structure at the core of the legal profession will survive.

Said Hahn, “The practice of law is a profession, not simply a bottom-line business."

Related ABAJournal.com posts:

BigLaw Aided ‘March of Dunces’ That Destroyed Economy, Yale Law Grad Says

Layoff ‘Herd Mentality’ Ignores Greater Savings of Pay Cuts, Prof Says

How Law Practice Will Become Like Off-the-Rack Suits

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