The Economist Ponders the Fate of the Billable Hour

The billable hour is currently a hot topic of discussion among lawyers.  In its cleverly titled "Killable hour,"  The Economist calls time-recording "perhaps the most deadly" of lawyers' "tedious tasks."  The short essay points out that clients and their need to contain costs are the driving force behind the search for alternatives to the venerable time-based fee structure.

The Economist mentions several alternative billing arrangements that are receiving greater use, including:

• fixed fees, with a "performance bonus" that is tied to achieving favorable results;
• fixed fees for high-volume legal maters such as commercial contracts, filing trademark applications, and some personal injury cases;
• "blended fees" which are a hybrid of hourly and fixed fees; and
• contingency fees, in which the lawyer or law firm takes a percentage of a judgment award or settlement.

Despite the existence of these options, it's not easy to replace the billable hour.  It can be difficult to quantify the importance of a given legal matter to a business, and no easier to quantify a lawyer's ability, knowledge, and experience.  Nevertheless, economic pressures continue to prompt law firms and their clients to seek some different arrangements that balance a client's need for predictability and control of legal fees with a law firm's need to generate profits.

By Steve Imparl, guest blogger