For a while now, the fate of the billable hour has been in question. Corporate clients have long been expressing their concerns that the billable hour fee structure could possibly encourage corporate counsel to prolong legal matters.

With the ailing US economy, these corporate clients are finding it more imperative to set budgets for operating their companies. As they are forced to tighten their belts, small and large corporations are putting more pressure on their legal counsel and law departments to do two things – get rid of the billable hour and control their legal costs.

The History of the Billable Hour

The history of the billable hour dates back to the 1960’s. At which time, it was customary for a lawyer to track the time spent working on their client’s cases as justification for their legal fees.

Opponents of the billable hour believe that as the legal profession has evolved over time, it has grown more competitive for lawyers in corporate legal departments and law firms of all sizes.

For years, it has been common practice for the productivity (and ultimately, the success) of corporate counsel to be measured by the number of billable hours they produce each week or month. Why? Because the more hours billed, the more revenue generated for the law firm. This pressure over the years has forced lawyers to put ‘productivity’ over what is best for their clients, quality.

What Does the ‘Demise of the Billable Hour’ Mean for Corporate Clients?

Smart corporate legal counsel will adapt to the change in the legal billing landscape by offering alternate billing options (i.e. flat fee payment arrangements) to their clients. This is a huge benefit for the corporate client because they can consider alternate payment arrangements and choose the method that is more affordable and feasible for their corporation.

Corporations across the nation may also find it easier to set their law department budgets and control their operating costs as the billable hour continues to lose its appeal.

How can the ‘Demise of the Billable Hour’ Benefit Lawyers?

Corporate lawyers should consider the potential benefits of working without the billable hour structure before they prematurely turn their backs on the idea.

Most lawyers want to provide their services at a cost that is affordable for their corporate clients. This surely helps client retention rates. But, the reality is many corporate lawyers are afraid to do away with the billable hour since it’s been a part of the legal profession for so long.

The demise of the billable hour can result in less stressful work environments for corporate lawyers. While I’m sure competition will remain a part of the legal profession, hopefully lawyers will engage in healthier competition and return to the days of judging their success and productivity based on the quality of the legal services provided, and not the quantity of the billable hours produced.