{"id":10621,"date":"2009-02-22T15:31:26","date_gmt":"2009-02-22T20:31:26","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/ethicalesq\/?p=10621"},"modified":"2011-08-05T14:53:09","modified_gmt":"2011-08-05T18:53:09","slug":"alf-1-other-thoughtful-voices-on-the-lawyer-billing-debate","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2009\/02\/22\/alf-1-other-thoughtful-voices-on-the-lawyer-billing-debate\/","title":{"rendered":"other thoughtful voices on the lawyer billing debate [ALF #1]"},"content":{"rendered":"

\"\" … W<\/em><\/strong>e’re going to permanently stop production at this weblog on March 1, 2009.\u00a0 As Your Editor and his alter egos wind down the blawg formerly known as ethicalEsq<\/em>, the f\/k\/a<\/em> Gang is going to do what we’ve done since the spring of 2003:\u00a0 Focus our punditry on American Legal Fees [ALF], with our primary concern being not the welfare of lawyers but the interests of the client — especially, the “average,” unsophisticated or inexperienced buyer of lawyer services, who is often priced out of the marketplace or left with crushing debt after an encounter with a lawyer. [see our Fees Page<\/a> for links to six years of posting on the topic; update<\/em>: click for ALF #2<\/a> ; #3<\/a>; and #4<\/a>; plus our farewell fee opus “Understanding and Reducing Attorney Fees<\/a>” (Feb. 28, 2009)]<\/p>\n

In our last-days ALF Series, we’re going to try to be slightly less cynical than the cranky, mischievous, but goodhearted tv character Gordon Shumway, a\/k\/a<\/em> ALF<\/a> (the Alien Life Form, who was created by Paul Fusco).\u00a0 We will, however, keep in mind this interchange with his earthly landlord and friend, Willie Tanner:<\/p>\n

Willie<\/em>: Some people are so blinded by the thirst for money, that it causes them to lose their values, and do things they shouldn’t do.<\/p>\n

ALF<\/em>:\u00a0 Well, that explains Ghostbusters II<\/em>.<\/p>\n

We think it also explains much of what is wrong with American Legal Fees and the relationship between lawyers and clients.<\/p>\n

…. \"\"<\/a> <\/strong><\/em>W<\/em><\/strong>hile bemoaning too-high fees and too-low morale in the legal profession, ethicalEsq<\/em>, Prof. Yabut<\/a> and I have been saying for years just how silly it is to scapegoat hourly billing as the primary cause of either client or lawyer discontent.\u00a0 Most of the things wrong with hourly billing are related to its abuse or to obscenely high hourly quotas imposed on lawyers by firms.\u00a0 We’ve pointed out, therefore, that nothing much will change if lawyers switch billing methods but insist on making just as much money.\u00a0 We’ve argued that each fee mechanism comes with its own anti-client incentives, noting that lawyers have found ways to manipulate every<\/em> kind of billing scheme to produce fees that clients rightly consider to be excessive.\u00a0 [E.g<\/em>., see our 2005 “chronomentrophobia<\/a>” posting; and \u201cbroadening the hourly-billing debate<\/a>,\u201d Aug. 18, 2007, which includes excerpts from many prior posts; and see our 4-part essay on contingency fees<\/a>.]<\/p>\n

In response, we’ve gotten virtually no support among the profession, but plenty of ridicule and distortion<\/a> from those who would like to kill hourly billing — often in order to make even more money.\u00a0 We’ve wondered when legal ethics experts and others with no financial stake would address this vital topic. \u00a0 Thanks to a chance stop at the Legal Ethics Forum<\/em><\/a> this week, I finally discovered a few other thoughtful folks who are unwilling to join the hourly-billing lynch mob and blindly embrace all forms of alternative billing as problem-free solutions.\u00a0 It was no surprise at all, given our experience<\/a>, that one of them was a Canadian law professor.<\/p>\n

After seeing a much-emailed article<\/a> in the New York Times <\/em>about the waning billable hour, U. Calgary legal ethics professor Alice Woolley wrote “Demise of the billable hour again?<\/a>” (Feb. 2, 2009).\u00a0 In that post, she points to the kinds of issues we’ve been talking about at length.\u00a0 Using larger words than our Prof. Yabut, Prof. Woolley says (emphasis added):<\/p>\n

\"\" “I wonder about the fixation with the billable hour as a measure of lawyer’s value. \u00a0While it has its obvious drawbacks, all billing methods are susceptible to the extraction of rents given the imperfections in the market for legal services<\/em>. \u00a0Moreover, lawyers moved to the billable hour for good reasons (more efficient allocation of risk) as well as more dubious ones (accounting firm indications that this would correct the lag in lawyers’ earnings). \u00a0Why isn’t there more critical discussion of this?<\/em><\/p>\n

Value-pricing pitchman Christopher Marston [Esq] responds to this call for more analysis with his usual blanket condemnation of hourly billing and refusal to admit there are any problems with fixed and value billing.\u00a0 In a comment<\/a>, Marston says the profession should just kill the billable hour and “stop talking about it.”\u00a0 He offers this typical analysis:<\/p>\n

“[people like himself] get that there is not a single customer that wants to buy an increment of our time. Increments are excrement.”<\/p>\n

In her reply to Marston<\/a>, Prof. Woolley notes that the history of the shift to hourly billing is unclear.\u00a0 As to the economics, however, she states:<\/p>\n

“[W]hile economists may dispute the merits of time as an economic measure, it is not obvious what measure works given the inherent non-homogeneity of the ‘product’ lawyers sell. If I go to lawyer A for task B, and to lawyer B, for task C, what meaningful measure do I have to compare the ‘price’ charged by two different lawyers – whose skills may vary widely – for two different tasks – the inherent ‘value’ of which may vary widely . . . .”<\/p>\n

Then, demonstrating why lawyers have fiduciary duties toward clients, Alice continues:<\/p>\n

“Further, if you use measures such as ‘value’ or ‘task’ payment, you still have the problem of information asymmetry<\/em>, the credence good problem<\/em> and the issue that, even ex post, it is not always clear whether the value received by a client arose from the skill of the lawyer or other factors – getting a good judge, having a case which even an incompetent fool couldn’t lose (or conversely, having a terrible judge).<\/p>\n

\"\"<\/a> In other comments to Prof. Woolley’s post, we are pointed to three recent blawg postings that deal thoughtfully with the hourly billing debate.<\/p>\n

<\/p>\n