Monday, February 23, 2009

Billable Hours

In my latest FindLaw column (here by around noon Eastern Time on Monday), I use a recent 9th Circuit opinion chastising lawyers for incompetence as an occasion for examining how clients can make educated choices about the value their lawyers are providing them. Among other topics, I discuss the billable hour, which is being seriously reconsidered at major law firms. I suggest that because of asymmetric information, no alternative to billable hours is perfect, but that clients may be able to develop outcome measures that do better.

Here I want to say a few words about the effect of billable hours. As an academic who occasionally practices law for paying clients, I must say that I don't enjoy keeping track of my hours. No doubt this is partly just a matter of habit. Most of my day is spent working on academic projects (scholarship, teaching, meeting with colleauges, etc), and while that time is typically scheduled, I don't have any reason to record exactly how long each segment takes. Further, part of the attraction of an academic career is the flexibility it affords. I can leave my office at 3:30 to take my daughters to gymnastics class, and prepare for the next day's class from 9 pm to midnight. If I take another break in between to read the newspaper or make a pot of tea, I don't have to stop any clock. I just get the work done eventually. Thus, when I turn to work for a client, I need to pay attention to time in a way that I don't otherwise.

Timekeeping is for me a small nuisance, albeit one that is justified by the rewards of occasional practice (both monetary and intellectual: I encounter issues in practice that I would miss purely as an academic). For law firms and their clients, the practice is potentially more destructive.

In my sixteen-and-a-half years as a legal academic, I have participated in a substantial number of formal and informal discussions about whether to tenure a junior faculty member, a decision reasonably analogous to a partnership decision for a law firm. In such discussions, I have never heard anyone argue that a junior faculty member should receive tenure because he or she devotes a large number of hours to the job. Hours are at best an indicator of something else--careful scholarship, devotion to students, service to the university--but never valuable in themselves. A colleague who is constantly in the library but never writes, or who meets for hours on end with students but leaves them hopelessly confused, or who attends committee meetings but is silent or, worse, bogs matters down in pointless discussions, would rightly get no credit whatsoever for the time wasted.

Billable hours skew things. To be sure, an associate who bills 3000 hours per year but produces terrible work-product would not make partner at a well-run law firm because he or she will eventually alienate clients. However, as between a brilliant and speedy associate who bills 1600 hours in a year and a merely very good, average-speed associate who bills 2500 hours, the firm has a good rationale for making the second one partner but not the first: The very good average-speed associate makes the firm much more money, given the practice of billing hours--even though the brilliant speedy associate may produce the same volume of work and with higher quality. Yet the brilliant speedy associate is clearly doing a better job by any other measure.

Finally, I suspect that the practice of billing hours makes work seem like a chore. When I was younger and was paid by the hour in varioius jobs, I invariably kept an eye on the clock, making me time-oriented rather than task-oriented. Or, for a more vivid example, consider the episode of The Sopranos, in which Vito Spatafore, hiding out in New Hampshire after his fellow mobsters discover he is gay, takes a job performing manual labor by the hour. We hear Vito's mental monologue as he tells himself that he has only 2 hours to go until lunch, then an hour and a half, and so on. When Vito finally looks at his watch and realizes he has over-estimated how much time has elapsed, he despairs, leading him eventually to give up on life as a wage slave and to return to his old life in the north Jersey mob---and within a few episodes, he is killed.

Posted by Mike Dorf