The American legal system needs correction, but it is not beyond repair. As someone who has spent three decades in the legal profession, I have observed certain undeniable flaws that have contributed to its broken state. The root of the problem lies within one of the oldest compensation models in history: the billable hour. However, it is important to note that the issue extends beyond the billable hour itself. The real problem lies in any compensation model that fails to prioritize the quality of legal services provided to clients. Until this fundamental shift occurs, the American legal system will continue to falter as a service sector.
Measure What the Client Values Most
The concept of the billable hour was initially well-intentioned, aiming for a fair exchange of financial compensation based on the time spent serving a client. Unfortunately, along the way, the focus shifted from delivering value to the client to delivering attorney compensation, often leading to exaggerating the measure of time spent. This misalignment between attorney and law firm incentives and client needs led to a situation where the quantity of billable hours became the primary metric, overshadowing the quality of legal services rendered. Attorneys were motivated to bill as many hours as possible, rather than prioritizing client objectives and delivering value.
An alarming metric commonly used in law firms is the “death chart,” a report listing every attorney’s production of billable hours for a given time period. Ranking low on this “death chart” below the “billable requirement line” is an awful position to be in when compensation, status and the subjective “making partner” standard requires big numbers on the chart. The emphasis on measuring billable hours, rather than measuring client service and satisfaction, distorts attorney incentives to the point where there is a real temptation to ‘pad hours’ and overbill clients. These actions hurt clients and compromise the integrity of the legal profession.
Time to Kill the Death Chart
We are long overdue to abandon billable hour requirements and the negative behaviors they incentivize. The focus on “Bill, Bill, Bill!” fosters the wrong priorities while harming both clients and attorneys. Clients are overcharged and often receive subpar legal service, while attorneys find themselves overworked and overwhelmed, leading to burnout and mental health issues. This is not a sustainable or ethical way to conduct business or live life as an attorney.
We need to be careful when considering alternative attorney compensation models. Moving towards an alternative compensation model, such as a fee per-file or per-case model, may eliminate the billable hour, but it introduces another set of perverse incentives. Emphasizing speed and quantity of cases closed may also sacrifice the quality of work and the ultimate success of the outcomes achieved. For example, in patent law, prioritizing the quantity of filings over their quality can result in narrow and unenforceable patents, leading to costly consequences in the future.
Measuring Quality and Producing Value with Reduced Costs in Patent Law
To address these challenges, law firms and clients should focus on measuring parameters that reflect quality and value. Patent work can be complex and arcane. It is often difficult for clients to tell whether their patent law firm delivered quality work product at a fair rate or if they cut corners and overcharged. However, quantifiable data and metrics are readily available to monitor and control patent legal work.
For instance, clients should measure allowance rate and time to allowance, within the framework of rigorous quality control procedures, to evaluate the quality and value of patent work completed by their supporting law firms. Clients will find significant budget savings by minimizing unnecessary back-and-forth interactions between the law firms and patent offices.
Additionally, a quality control methodology that incorporates multiple levels of review throughout the legal process is a crucial step law firms must take to deliver quality and value to clients. A thorough quality control process properly implemented by the law firm is a proven method of producing high quality results and reasonable pricing. Our firm utilizes a 4-step quality review process for all patent applications that ensures superior quality legal service is delivered for every matter our attorneys touch, for every client. Quality is measured and assessed at multiple levels and at multiple milestones of the matter. By doing so, quality becomes an integral part of every matter.
Finally, clients should engage their law firm partners in evaluating alternative compensation models that appropriately compensate for high quality legal work while deemphasizing potential hourly billing abuses. We eliminated the “death chart.” Our attorneys do not have a billable hour minimum requirement. There are no case quotas disincentivizing quality in favor of speed or quantity. Are we leaving money on the table, potentially? Perhaps. What motivates us is not being atop the “death chart,” but our position on the top of the minds of clients in search of great service at reasonable pricing.
The broken American legal model can be fixed by prioritizing quality over billings. By shifting the focus away from the billable hour and towards delivering value, the legal profession can regain its integrity and serve clients more effectively. Embracing alternative compensation models and establishing rigorous quality control procedures will ensure that attorneys provide excellent service while achieving reasonable pricing. It is time for the legal profession to measure and prioritize quality service and client satisfaction as the driving forces for success.