Hourly billing and communism

Stephanie West Allen over at Idealawg is better than any RSS feed. She always sends me great posts.

This one is from The Greatest American Lawyer. I showed it to a group of lawyers this past Saturday at the close of a Value Pricing Workshop. Gotta love this:

But there is one thing that stands out most from my presentation. It was how true it struck when I said the words “as bad as hourly billing is for clients, it’s worse for lawyers.”

The room was filled with silence. No one said anything. But I doubt anyone disagreed. Let me say it again. As bad as hourly billing is for clients, it’s worse for lawyers.

To live your life as though each minute spent doing something else besides billing the client was a wasted moment is a waste of life.

You know the feeling I’m talking about. Your wife calls. She’s telling you about some otherwise seemingly trivial part of her day (which is a huge part of her day) and you’re thinking about the fact that you’ve only got four and half hours in today and already four o’clock. You’re trying to be polite at best, but mostly you’re trying to get back to your hours.

Imagine a life where each hour was measured exactly the same. It sounds like communism to me. It doesn’t matter how hard you work or the quality of your work, you get paid the same. If capitalism is all about incentives, then we cannot help but pose the most fundamental question of all. What is the incentive of the billable hour?

Amen. VeraSage is responsible for illustrating the link between the billable hour and Karl Marx’s Labor Theory of Value.

It is a form of communism, with the incentives being misaligned between lawyer and customer. For a profession that prides itself on its ethical duties of representing the customer to the best of its abilities, it amazes me that it utilizes a pricing method which violates that very spirit.

As economists say, incentives matter—the rest is commentary. This is why you never see anyone wash a rental car. To think otherwise is to deny economic reality.

Isn’t past time to align the incentives and bury the communistic billable hour?

Speak Your Mind


Time limit is exhausted. Please reload CAPTCHA.