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Boston Law Firm Bans Billable Hour

Posted Oct 8, 2007 2:57 PM CDT
By Martha Neil

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Updated: A small law firm in Boston has boldly done what many competitors probably wish they could but think they can't. Shepherd Law Group, a five-lawyer employment boutique, has banned the billable hour. If clients insist on having attorneys who bill their time, they have to retain another law firm.

Clients of Shepherd are charged either a flat annual fee or a fixed price for a specific task, reports the Boston Globe in a lengthy article about the firm and the history of the billable hour.

"Hourly billing is wrong, and it's anti-client," says Jay Shepherd, the firm's founding partner, who also authors the blawg Gruntled Employees. "There's a disincentive to be efficient since you get paid more if you take longer to finish a matter—even though the client wants it to be finished as fast and efficiently as possible."

The American Bar Association has estimated that about 90 percent of law firms use hourly billing, but recommends that lawyers look for alternative ways to charge clients, the newspaper says.

"Nobody is happy with it," says former ABA President Robert E. Hirshon of the billable-hours approach. "The attorneys who are practicing law don't like it. The clients don't like it. And yet everybody seems to believe that they're stuck with it."

Scott Turow has recently written an ABA Journal feature on the topic ("The Billable Hour Must Die"), as discussed in an earlier ABAJournal.com post.

(Updated at 5:18 p.m., CDT.)

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