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If You Only Remember One Thing…

April 26, 2012

Remember Parkinson’s Law which states that work expands to fill the time available.

Doesn’t sound so bad, right?  Well, if you are getting billed by the hour, it can get real ugly, real fast.  Hourly fees reward quantity, not quality of work.  Hourly fees also create peculiar incentives for your lawyers.  Hourly billing provides little incentive to settle early or to litigate cost-effectively. Rather, it encourages inefficiency and over-staffing, because additional billing increases partner profit.

A little math – and this is some math to be scared of:

  • An average paralegal can generate $15,000 of billing in a month
  • An average associate can generate $30,000 of billing in a month
  • An average partner can generate $45,000 of billing in a month

As you can see, unmanaged hourly billing is essentially giving your law firm a blank check.

Which brings us back to a couple of unfortunate and dangerous corollaries to Parkinson’s Law:

  • Legal work and your legal bill expand to whatever amount of billable time your attorneys need to meet their quota
  • Your legal bill ultimately expands to whatever amount you allow or can afford to pay

Once lean and efficient before the evolution of the billable hour (fade to nostalgic black and white vision of Perry Mason), modern law firms have become (from the client’s perspective) out-of-control billing machines.

Unfortunately, the victim of these new realities is YOU – the trusting client.

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