Attorney's Fees: Is the Billable Hour Fatally Flawed?

I have worked with the billable hour compensation system in litigation for many years. The method has some flaws, one of which is the difficulty of the client (as well as the lawyer) to discern or appreciate value especially when the cost(s) of seemingly similar cases are compared. In the last few years there has been a lot of discussion about moving away from the billable hour altogether in favor of a flat, fixed or value billing methodology. These methods have been used more frequently in recent years but not typically in any uniform fashion. The notion is that the attorney and client would also communicate at various stages of the litigation to make compensation adjustments based upon the unique aspects and/or outcome(s) of a case. In the meantime, the billable hour remains dominant at least on the defense side, largely I think because alternative methods are not clearly articulated, massaged or even tried. Few wish to take the time or risk experimentation. The billable hour persists by momentum and clarity despite opinions of dissatisfaction which have echoed now for decades.

This month, lawyer Evan Chesler, the presiding partner of Cravath, Swaine & Moore, again questions whether the billable hour makes any sense at all in an interview in Forbes magazine. The opinions expressed by Mr. Chesler are not new but the sheer volume of response to the piece may signal that the time has arrived for some real change to occur. On the other hand, some saw Mr. Chesler's comments as a mere lure to clients in a weakened economy. At a minimum, however, it is important that everyone acknowledge compensation issues, the faults of the billable hour system and that we make a concerted effort to communicate about how compensation can be calculated during the life of a litigated case. In this manner, over time, some clearly defined and very workable alternative(s) to the billable hour system should rise to the top and receive widespread acknowledgment and use in litigation.