“Fees Fi Fo Fum”: Lawyer Fee Arrangements, Part 2 – The Billable Hour

Welcome back to the Lawyers & Liquor discussion on fees!  So last time we talked about the historical difference between the American Rule and the English Rule, which is essentially the difference between you paying someone to kick you in the nuts and someone else paying to try to kick you in the nuts.  A brief summary of our last post is as follows:  In America, lawsuits require that you bear all of your own expenses, paying the lawyer out of your own pocket even if you win, with a rationale of “access to justice.”  However, the traditional rule on most Common-Law countries, and indeed in a lot of the world, is that the loser in a civil action will pay reasonable attorneys fees for the winning side, the idea being that it’s the losing side’s fault the matter was in court at all to begin with.

This isn’t a new thing.  America deviated, as we talked about, back in 1796 in a Supreme Court decision that found making the loser pay up may actually dissuade people from going to court and asserting meritorious claims and defenses because of the specter of the money-grubbing attorney in the background.  We also talked about how that decision is a remnant of a time when it was completely acceptable to pay your lawyer with a side of beef and a fresh coat of paint on his palatial farmhouse in the country.  America, it seems, never got the message that when a ham has less monetary value and doesn’t stretch as far, a refiguring of the way we award fees may be needed.

So what does this mean for you, the lawyer or layman in the good old U.S. of A who may want to make sure at some point they see a payment on a fucking bill or, in the case of the latter, may want to know what they’re getting into when they hire a lawyer?

It means we have a sort of complicated set of “ways to pay for shit” that clients can utilize.  Which we’re going to talk about today, starting with the Billable Hour.

Escorts and Attorneys Charge By The Hour

When you get right down to it, there’s a lot of similarity between lawyers and sex workers.  Neither of us really give a shit about how unattractive your metaphorical, or in the case of the latter literal dick is.  We’re not especially concerned with your personal life or motives so long as it doesn’t put us in danger.  We don’t even give a shit about your background, and we’re willing to call you a bad boy if that’s what you need us to do.  Some of us, especially those of us with obstinate clients, may even be willing to slip on the metaphorical leather gear and give your ass a good paddling from time to time in order to play Mistress Marie, Esq.

And, of course, both of us have absolutely no problem billing your ass for the hour.

There’s a saying among the escorts I’ve known (get your minds out of the gutter, I’m a lawyer, it’s a purely professional relationship), and it’s “You’re not paying for me, you’re paying for my time.” It’s more or less the same for lawyers, as a good fucking number of us bill by the hour.  However, we’re a little more generous than the professionals that bill you for the hour and don’t care if the load’s blown in the first five minutes you’re still paying for the whole damn thing and there’s no negotiating, dammit. Lawyers will only bill you for portions of an hour, normally by the tenth of the hour.  That means every six minutes is 1/10 of an hour, and we can bill it as .1, .2, .3…you get the idea, right?

Now, that sounds reasonable, but a lot of firms, and if you’re a lawyer your firm, should have something called a “minimum billing” set forth in your engagement letter.  At my office, it’s “.2”, meaning that I bill nothing below a .2 unless I decide to write it off or drop it down to a .1.  And that’s for every fucking task.  Send me an email that I have to stop to read? .2.  Call me three times during the day? .2, .2, .2.  Forward me a funny news article tangentially related to your case? .2.  Do all of them in ten minutes?  Congratulations, you just incurred an hour of billing, and now I can take a smoke break.

For lawyers in those types of firms, our asses live and die by the billable hour.  Why?

We Get Judged By Our Billables.

You know what’s really great? Knowing that your profession genuinely cares about its clients and doesn’t view them, in some perverse way, as cash pinatas and judge them on your ability to beat as much money from them as possible.  That’s so refreshing and nice and…

…Oh.  Wait.  See this little part of your contract here?  That part that states you’re expected to bill X,XXX hours per year?  Yeah.  That’s pretty standard.

Like, for my office I’m expected to generate about 1,900 billable hours annually.  That’s not “work 1,900 hours,” which roughly boils down to 40 hours per week, that’s bill 1,900 hours.  And generally speaking, you can’t bill everything.  Time spent working on a billing matter, for instance, isn’t billable.  Neither is time spent doing client intake, communicating with other lawyers on a variety of matters, going to CLE’s, etc.  The rule of thumb is for about every 1.5 hours – 2 hours you work, you’ll be able to bill out and collect on one hour of time.  Also, you need to go over and above the minimum billables, especially if you aren’t a partner, because that’s the bare baseline required to keep your fucking job.  And partners will write that shit down when they send out the invoices at the end of each month, discounting your time and therefore your billables.

So what’s the end result of this? If I think you’ll pay, I’ll bill the fuck out of your case.  I’m taking the file into the goddamn bathroom with me. I’m going to slide it under my pillow with print-outs of relevant case law to learn the argument by osmosis.  If I’m jerking off and I fantasize about opposing counsel in your matter, that’s a .3 for “Visualization and manual preparation for oral arguments.” Bill, motherfucker, BILL!

Oh, Those Short Bills Add Up, Too.

I bill out at approximately $200 per hour.  That’s nowhere near what I personally make (a good assumption is a non-partner makes about 1/3, or a little less, of what they bring into the office), but it’s what the office bills me out at.  So at $200 per hour, you pay $40 for 12 minutes of my time.  That doesn’t sound like much when you stick it in a vacuum but…hey…remember earlier when I talked about “minimum billables” and how every time I have to switch tasks for you that’s a new billable?  That means if you call me three times in the day and talk to me for seven minutes each time, your bill for phone calls on that day is $120 unless it’s written down before the invoices are sent.  And even if I decide to be nice and bill you at a .1, you’re still paying $60 for those three emails you sent me.  Which can be a pain in the ass because…

To Keep the Bill Down, Clients Won’t Communicate

Clients, after noticing that my phone calls and emails cost more than a tank of gas for a brief period of lawyer time, tend to clam up.  They stop responding to things, stop calling, and stop sending things over all to avoid being billed for the time it’ll take once I receive it.  And that’s a bad thing, because it’s hard to represent a client who won’t communicate because they’re living in mortal fear of your invoice at the end of the month.  Things will be delayed, filing deadlines will be missed, and information that is absolutely crucial will not be conveyed because the client is scared of reaching out to you.

So…I mean, why is this the standard way of billing?

Because It’s Accepted and a Real Moneymaker.

Simple fact is, the Billable Hour isn’t some time-honored tradition dating back to the beginning of the practice of law.  It’s relatively recent in the practice of law, only really coming into vogue back in the 1960’s.  Prior to that, contingency fees were all the rage, and before that it was all about capped fees set by the bar associations that said “A lawyer cannot charge more than $xxx for y type of matter.”

But for the past almost 60 years, the billable hour has been the predominant fee arrangement in the practice of law, and a lot of that is because it definitely brings in money.  But it makes clients uneasy about the cost of litigation and can lead to, as we just touched on, some pretty big issues for the management of the case.  So when does the good outweigh the bad?

In the minds of the older senior partners that espouse the billable hour? Never. And that’s what we have to recall here: the partnership, which in law means the eldritch council that would go back to chiseling shit in stone tablets if they could, has the final say on how a firm charges and collects its fees.  And for them, while they are lawyers, they’re also business owners and they’ll stick with this tried and true horse until they’re whipping the last breath of life out of a client’s bank account.

Are There Other Options?

Yes, yes there are.  And we’ll get into those next week as we talk about contingency and flat fees, then circle back around to how we can reform the way clients pay for litigation.  But for now, I need to go brush out the fursuit and shit, because this Friday is Furry Friday here on Lawyers & Liquor, and we’re gonna be talking about sex trafficking. Sort of.