The end of the billable hour?

The New York Times reports that the recession is causing law firms to re-think the basic business model of the billable hour. I wonder if this is really the case, but if firms truly do start to re-think the way they deliver and charge for legal services, I applaud the trend. Much has been written about the inefficiencies and perverse incentives created by what has become the standard business model. Charging by the hour penalizes efficiency, and encourages lawyers to engage in time-consuming tasks that may be of marginal benefit to the client. Coupled with the compensation structures at most law firms, which reward lawyers for racking up billable hours rather than for saving clients’ money, this system seems ripe for re-examination particularly during an economic downturn when clients would like to reduce their legal expenses.

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