Inflated Billing Practices, Part II

To pick up where RAB left off on March 27, 2013, I myself am looking forward to the demise of the hourly billing model.  Because, to be frank, it’s a scam - and people have known it for years.

I used to work as an engineer, and I tend to compare what I do now as an attorney in a “JD-Advantage” (I still can’t type that without chuckling grimly) position to what I did prior.  As an engineer, I had to charge my time to various contract jobs that went through the factory, just as attorneys in private practice bill their clientele for individual cases.

My beef with the hourly billing model is that it is hardly an exact science to begin with, and is fraught with potential for abuse (“shocker!”).  I review attorney bills all the time, and laugh at what is charged to me for essentially “churning the file” in many, many cases.  Even when dealing with people who do try to bill accurately and ethically, one runs into what I call the “Airplane” dilemma.

The dilemma is as follows: I’m on an airplane for (client/contract X) business travel, and I have three hours to kill.  I am billing (client/contract X) for my travel time and expenses.  Fair enough.  Now, I can kick back and do nothing, or I can work on another (client/contract Y) file for those three hours.

If I work on another file, the engineer in me says “I’m not creating time ex nihilo here; there are only three hours at play.  If I work on “Y” on the plane, then I am not simultaneously going to bill “X” for those same three hours.  I’m not two people doing two jobs at once – that’s why they are called “man-hours.”  Frankly, it’s also ethical to not charge “X” more than my travel expenses while I am doing actual file-work for “Y” on the plane.”

If I work on another file, the lawyer in me says “Woo-hoo!  Double time!  I’m traveling for X for three hours!  Charge ‘em!  I’m working on Y’s file!  Charge ‘em!”

The difference here is that as an engineer I was salaried, while as a lawyer, it’s eat what you kill.  If both “X” and “Y” were going through the same factory and I worked on both projects in an engineering capacity, it was considered a courtesy to split my time appropriately between projects.  Both projects benefitted from my presence (i.e. troubleshooting), “X” and “Y” both had product roll off the line at the end of the day, and I get paid either way.  It would be unfair for me to tag “X” with all my hours and not tag “Y” for any, as that would be a free ride for Y.  It would be equally unfair to charge “X” and “Y” the exact same time apiece, because I am splitting my time between both jobs, not working both jobs simultaneously.  Both “X” and “Y” had given “retainers” to the factory, and I needed to charge those retainers appropriately.

I remember trying to explain this to law professors (in an ethics class, no less), law students, and practitioners alike.  They all looked at me with furrowed brows and said “you bill X and Y for the same time” as if I was a dolt and there was no dilemma at all.

It was then that I realized the scammy nature of law practice and billing.  I viewed the world in terms of “man-hours”, but lawyers viewed the world in terms of “billables.”  The fact that a human being cannot be two places at once, nor actually work on two jobs simultaneously, leads to situations where one person can charge more than 24 “hours” a day.  And the increase from the ABA recommended 1,300 billable hours a year in the 1950s to 2,200+ billable "hours" a year, today.  And this does not take into account actively “churning the file”, as shown in the case of DLA Piper.

I remember meeting a 25-year-old attorney at a interviewing function back when I was in law school.  She was nice, intelligent, and freely admitted that “look, I’m brand new, and I don’t know what I’m doing.”  I appreciated her candor.  But I also knew she was earning $160k back in the hey-day of legal practice and that, in principle, was ridiculous.  But it was a “big name” firm, so whatevs.  Boomer partners gotta get that PPP.

Again, no offense to her.  But $160k at 25, in 2003?  I knew of engineering managers with 20-30 years experience that didn’t earn that.  The simple fact that the billable model was unsustainable and is now crashing is a long overdue correction, not unlike all the other bubbles that our economy is apparently predicated upon.