Lawyer Pay

Accounting 'rogue outliers' seek to change billable hour

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Will a group of “rogue outliers” in the accounting profession change professionals’ reliance on the billable hour?

A New York Times magazine article uses the “rogue outliers” description in a story about the efforts of an accounting group called the Cliff Jumpers. Many in the national group have abandoned the billable hour to focus on a payment system based on the value of their insights for specific groups of clients. An accountant might focus on entrepreneurs who want to sell their businesses, for example, or people who want to start small businesses.

The article identifies problems with the billable hour, including the pressure to work long days and the incentive to work on longer projects at the expense of shorter tasks that require special knowledge.

According to the story, the billable hour took hold after an ABA pamphlet promoted it. “The notion of charging by units of time was popularized in the 1950s,” the story says, “when the American Bar Association was becoming alarmed that the income of lawyers was falling precipitously behind that of doctors (and, worse, dentists). The ABA published an influential pamphlet, “The 1958 Lawyer and His 1938 Dollar,” which suggested that the industry should eschew fixed-rate fees and replicate the profitable efficiencies of mass-production manufacturing. Factories sold widgets, the idea went, and so lawyers should sell their services in simple, easy-to-manage units. The ABA suggested a unit of time— the hour—which would allow a well-run firm to oversee its staff’s productivity as mechanically as a conveyor belt managed its throughput. This led to generations of junior associates working through the night in hopes of making partner and abusing the next crop. It was adopted by countless other service professionals, including accountants.”

Prior coverage: “The New Normal: Time to Blow Up the Billable Hour Formula” “Law Firm Pricing Directors Suggest Alternative Fee Strategies, Call for Focus on Profit, Not Hours” “Law Prof Hits Quick Responses and Billable Hours, Cites ‘Informational Amphetamines’ “

ABA Journal: “Facing the Alternative: How Does a Flat Fee System Really Work?”

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