The New Billable Hour

There are some cases and matters where the client requests to pay on an hourly basis.  There are also matters which don’t lend themselves to a flat, contingent or other fee structure.  Litigation is sometimes unpredictable since you can not control whether the other hourly lawyer is going to file a stack of meaningless paper to which you have to respond or requires you to show up in court.

Task-Based Billing:

So what does a lawyer do when hourly billing is the billing method of choice?

First of all, the problem with the hourly billing model lies as much in HOW lawyers implement it, as the model itself.  The core problems with the present version of the hourly billing method and which make it clearly anti-client include:

• The partner push to bill every second
• The billing of time without any consideration of value or quality
• Minimum hourly quotas for attorneys
• Billing for administrative tasks
• Billing for phone calls with clients which just encourages clients not to call

I have developed a list of tasks which I do not bill for such as most client phone calls, transmittal letters or emails, administrative tasks, monthly client update meetings, etc.  In short, I do not bill for anything that does not add real value to resolving or winning the client’s matter.  This drives me away from ‘make work’ tasks, and towards tasks that really make a difference to the client.

Recently, I have added a new twist.  I have different rates for different activities. Attendance at trial is the maximum hourly rate since that is the activity that requires the most expertise.  Drafting important motions is billed a my normal rate.  Drafting standard discovery response is something a paralegal can do in most instances.  Preparing or responding to simple discovery is billed at a rate less than half of my standard rate.  This approach encourages lawyers to push tasks down to an appropriate person at an appropriate billing rate.

The focus in a task-based billing model is not on how valuable the lawyer’s time supposedly is.  The focus shifts to how difficult the task is, and how well it is accomplished.

I include on every hourly bill all the tasks performed which were not charged and the fee rate of each tasks.  Client’s are amazed by how fair task-based billing appears on the bill.  And of course, they can’t believe they aren’t being charged for activities that might have comprised 30% of the hourly bill at other law firms.

Task-based biling has been around for a while.  The Uniform Task-Based Management System (UTBMS) is a budgeting and billing system co-developed in 1995 by the American Bar Association (ABA), American Corporate Counsel Association.  The UTBMS was designed to provide clients and law firms with meaningful cost information on legal services. 

Here is an ABA chart from 1998 which lists the most common which clients make about lawyer bills. Many would be resolved by a task-based billing model.