Will hard times take down hourly billing?

Hat tip to Stephanie West Allen for sending me this article from the Washington Post, “Rethinking Legal Fees for Lean Times.”

Here’s the interesting point in this article:

“I think the financial crisis will exacerbate everybody’s pain point,” said Pam Rothenberg, managing member of Womble Carlyle Sandridge & Rice’s D.C. office. Rothenberg said the firm, which has 550 lawyers in 11 offices, works within a budget that the client and firm set ahead of time.

That’s an interesting hypothesis, and it indeed might force some firms to transition to Value Pricing. But I have my doubts. The billable hour has survived prior recessions, usually emerging even more entrenched in the legal profession.

Of course, the article spouts the conventional wisdom that this change is being driven by legal counsel:

New efforts to jettison hourly billing are being driven by in-house corporate lawyers, who say they have grown frustrated seeing fees to outside firms soar even as they slash their own costs. They said they want more certainty in their legal budgets and worry that outside firms are spending unnecessary amounts of time on their matters.

This, too, has been said for decades, and it’s nonsense. In-house counsel will not drive this change, only law firms can, as we’ve pointed out time after time.

Just read the lawyer quoted in the article that doesn’t plan to abandon the billable hour, except in very rare cases.

Firms like Jay Shepherd’s, who is cited in the article (and is one of our Trailblazers), is further proof that the innovation on pricing strategies originates from sellers, not buyers.

Since we are quite interested in what the “burning platform” will be that will, ultimately, force firms to give up the Almighty Hour, we’d love to hear if you think tough economic times will create the tipping point?

My personal bet is the competition for talent will drive the change more than anything else. Knowledge workers don’t want to account for every six minutes of their lives.


  1. Interesting question. My thoughts: http://www.knowingandmaking.com/2008/10/ron-baker-on-hard-times.html

    Incidentally this topic has come up three or four times in the FT in the last six months (I was quoted in one of them), so if clients in the UK aren’t asking for it yet, they have a good chance of figuring it out soon.

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