Death of the Billable Hour

Most corporate and business clients are familiar with the billable hour. Law firms have been using this model to bill clients since the 1960′s. This model is old, and is used by large law firms to project their annual budgets. Clients have long dreaded the bills they receive from firms that use the billable hour model. Partners in America’s largest firms charge in excess of $600 per hour. This hourly rate, coupled with law firms’ mandatory minimum number of billable hours per year, can often times lead to dreadfully large legal bills.

Evan R. Chesler, a partner at Cravath, Swaine & Moore, criticized the billable hour as something that “seem[s] to pile up to fill available space.” Kill the Billable Hour, Evan R. Chesler, Forbes.com, January 12, 2009. Mr. Chesler was referring to law firm policies that require attorneys, particularly associate attorneys, to bill a minimum number of hours per year. Mr. Chesler further stated that clients “feel they have no control,” and ” that there is no correlation between cost and quality.” After all, when a lawyer bills only by the hour, there is little incentive to settle the case early. The law firm makes more money when the case drags on.

Additionally, these days, clients are less willing to pay law firms to teach new associate attorneys how to practice law while they rack-up billable hours. Firms that offer hybrid fee structures offer the client two primary advantages: (1) the firm’s pay check depends in part on the outcome of the case, and not the number of hours billed, and (2) the associates working on the case are learning on the firm’s dime, not the client’s. The pressure at large firms to bill a minimum number of hours per year (usually 1,900) creates a conflict between a client who wants cost effective service, and a firm that wants increased billing. In many large law firms, attorney worth is measured by the number of hours billed, not substantive experience or results. This model unfortunately has dehuminzed the client, and replaced him or her with a stopwatch that keeps track of every second an attorney spends on the case. This includes billing for every telephone conversation, every e-mail, every piece of paper, and every 44 cent stamp.

Shan Davis, the founder of Shan Davis & Associates, has a simple philosophy: provide clients with the highest quality of advocacy at the most reasonable rates. We understand that the billable hour is not affordable for all clients. We also understand that each case is unique, and that billing only for the hours spent may not be in best interests of the client or the attorney. Unlike large law firms, we have the flexibility to offer flat fees, hybrid fee structures (for example, low hourly rates with a contingent payment based on the outcome of the case), and contingency fees. Shan Davis & Associates belives the outcome of the case is more important than the number of hours billed. Practicing law is more than a business to generate revenues. It is a profession, a passion, and way to help people and businesses facing crises. Because we sincerely care for our clients, and trust our ability to succeed, Shan Davis & Associates puts more into a case than an excessive number of billable hours.

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