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December 03, 2004

Comments

Enrico Schaefer

There is more to the practice of law than billing by the hour, flat fees and contingency fees. Lawyers should define and deliver results, and be willing to talk about legal budgets, expectations and exit strategies.

The billable hour symbolizes so much of what is problematic with the practice of law and, I believe, accounts for the lion's hare of the negative attitudes we see towards attorneys. The bottom line of the ‘hourly bill’ has become the bottom line 'period' for most law firms. You can't even question the hourly bill premise without raising eyebrows at most hourly firms. Law firms rarely treat clients as customers and have forgotten they are in the service business. If you ask a client why they don’t trust lawyers, it typically has something to do with billing practices and the perception that attorneys look after their own interests, rather than the client.

Unfortunately, it is not so much the ‘hourly bill’ model but how that model is practiced in today's legal environment. Instead of finding ways to make litigation more affordable, law firms only focus on new ways to add hours to the client's bill. In the end, legal representation becomes less affordable for most Americans and businesses.

People who propose tort reform often say they just feel there is something wrong with allowing our justice system to run on the same principles as capitalism as say, an automotive vendor, insurance salesman or store owner. Doesn't the legal profession require something more than profit motive?

When the practice of law is measured by the number of hours billed times an hourly rate, it is easy for the less tangible expectations to get lost. In many firms, 'hourly billing' becomes a standard in itself. The presumption is that only clients who think they received value come back for more legal services. But most people need a lawyer once in their life. They don't have the luxury of taking their next legal case elsewhere. The stakes on a clients one and only case are usually very high. You only get one chance to win your case. There are usually no 'do overs.' The wrong choice can be costly, especially by the hour!

In the sense that 'value is paid for value,' market forces are not inherently inconsistent with legal practice. Few attorneys think much about how legal value is measured. Market forces have less impact on law firms than a product manufacturer or store owners. Buying an hour of legal services is different than buying an hour of lawn maintenance. I can see that my lawn looks good after it is mowed. How does a client know if they received value?

I have posted regularly on the topic of billing models and finding a good attorney. You can find more information about my views on this topic by going to http://tcattorney.typepad.com/tc/2004/10/finding_smart_c.html#comments

Enrico Schaefer, Traverse City Attorney


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