Law Practice Management and Technology

The Bottom Line Volume 36, No 2, August 2015

The Rise—and Potential Fall—of the Hourly Rate

By Ed Poll, Esq.
Principal, LawBiz® Management

Historically, until well into the post-World War II era, legal fees were based primarily on the nature of the service provided, the results achieved, and the amount at stake. Determining an appropriate fee for the work was a matter of professional judgment.

That changed in the mid 1960s when clients began demanding detailed billing statements and lawyers implemented timekeeping records as a management tool to seek greater efficiencies. As a result, today most lawyers are paid by the hour—almost in the same way as an hourly laborer.

When lawyers are paid by the number of hours worked, though, self-interest can and often does affect their judgment about how much work to do for the client. Most lawyers’ billings are “features” lists: This is what I did, this is the amount of time it took to do it, and this is what you owe me. That approach breeds dissatisfaction among clients because it doesn’t address value and benefits—the worth to the client, as opposed to the cost of the service.

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