Tuesday, March 9, 2010

The Billable Hour

Being a lawyer, I'm well acquainted with the billable hour. Granted, just becuase I'm familiar with it, doesn't mean I like it. In fact, I downright hate it.

The problem is that it perverts incentives. Normally, work is about being efficient and getting things done. While I'll concede that when a deal has to close, it has to close and the work needs to get done by a certain deadline, I'll also counter that generally efficiency is the last thing anyone in a law firm is thinking of under the reign of the billable hour.

In an environment where bonuses are determined largely on billable hours (and even base salary at certain firms) a lawyer finds him or herself effectively penalized for efficiency. The quality of work could be the same between two attorneys on the same assignment, but if one can get the job done in an hour while the other takes three hours then on paper the slower one appears to be more valuable. If that slower attorney keeps up the pace he might finish the year with a hefty bonus, which his colleague, who has done a similar volume of work but more efficienty, does not receive.

It just doesn't make sense at all. I understand the rationale, since attorneys are billed out to the clients on an hourly basis, but I see things changing on the horizon. Or at least one can hope.


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