Will the billable hour ever die?

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According to Slate’s Lisa Lerer, the billable hour may be already be under attack by some large clients of the largest firms. But what about solo and very small firms?

Here is how I do things now, and then I will talk about the “fair fee retainer agreement” I have been working on.

Most of my work is either contingent fee or flat fee. Since my contingent-fee work is mostly consumer rights litigation, attorney fees are usually a part of damages. All courts that I know of use the “lodestar,” or hourly rate times hours worked method to determine a fee award. So I have to track all my time in those cases.

I also track all my time in my flat fee cases. Since debt collection defense cases generally involve similar issues, I can determine the average amount of time it will take me, and I set my flat fee rates accordingly. In some cases, I will spend more time, sometimes way more time, than I charge. In others, I will spend less. It evens out.

Finally, I do some hourly work in cases where I do not feel like I can predict the amount of work that will go into the case. In those cases, I take a retainer and bill against it. The retainer always has a non-refundable component, but I bill fees (not costs) against that portion, as well.

In my spare time, however, I have been working on a “fair fee” retainer agreeemnt. I got the idea after reading Scott Turow’s “The Billable Hour Must Die” last summer. My idea is to bill by the job, and bill in phases. My retainer has a list with check boxes and room for a number. I estimate the value of each phase of the case (pleadings, discovery, dispositive motions, trial, etc.) and put a number on it. Starting at the beginning, the client can check as many boxes as he or she wants to (but cannot skip boxes, although some boxes–dispositive motions, for example–are grey because they may not apply. The retainer states that it expires after the work on a phase is finished and the next phase is not paid for within ten days of notice that the phase is finished.

The retainer also requires both parties to negotiate in good faith if “something comes up.” I have not figured out how I want to define “something” yet, but my thought is something like I expend more than twice the amount of hours than you get if you divide the phase fee by my hourly rate. I’m not sure about that, however.

This is not perfect. I am still thinking through some of the implications. And to some extent, I already incorporate this into my flat fee rates. But I like the idea of getting away from the billable hour and eliminating the friction that it generates between attorney and client.

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  • In theory the “fair fee” retainer sounds interesting; however, it is not practical since in NY we cannot discontinue representation in a court matter without the client’s consent and court’s approval. All of the retainer agreements in the world will not get you out of a case unless the client signs off on it or the judge allows it. It took me 2 motions in three separate jurisdictions to get out of representing one client with whom I had signed retainer agreements. Clients will agree to anything prior to filing a suit. It’s a different matter when they start incurring discovery and motion costs.

  • Sam Glover

    The same is true in most criminal matters, as I understand it, and all federal matters.

    Flat fees will not work in every case, but for cases where they do work, they are great. I use them for debt collection defense, for example. I take a flat fee up front, plus an advance on costs. I don’t have to worry about getting paid, and the client knows what the cost of hiring me will be up front.

    If they don’t want to pay for an expert or a motion, that is their decision. I don’t think I have any obligation to advance costs of litigation that they do not want to pay.