Screaming for billable hours

Law firms are not institutions inclined toward change or designed to change rapidly.  Most are partnerships and in order to be a partner, legally, one must be a lawyer.  Non-lawyers cannot ascend to the partnership.

This means that the leadership of these law firms (or, actually, businesses) is made up entirely of people who are not trained to run businesses, who did not set out to run a business, and who (in large part) have never considered managing other people to be a skill they needed to acquire.

When I became a senior associate, I attended a one day training session at my firm where, at most, an hour was spent on how to manage junior associates working on my transactions.  I remember feeling somewhat bewildered about what percentage of my work should be devoted to teaching a junior associate and what percentage should be devoted to just getting the assignment done.

Most senior associates err on the side of just getting it done.

This means that junior associates are often left to do the most meaningless tasks on a transaction and almost never get any feedback about attempts at more complicated issues or work.

Law firms, still (though this is changing somewhat) live and die by the billable hour. Associates and partners are expected to keep track of their time down to the tenth of an hour (every six minutes) and are meant to attribute every single second possible to a client matter number. Compensation and advancement are linked almost inescapably to the amount of hours (as a strictly numerical matter) are billable to a client.

Different levels of attorney have a different billable rate.  Often the overall ratio of partner hours to senior associate hours to junior associate hours are agreed in advance with clients of the firm.  Additionally, clients are often unwilling to pay for many hours of junior associate time simply because they feel, kind of rightly, that junior associates take longer to do work that is less important to them.

In practice, this means that partners often have to write off (or not charge the client for) junior associate billable time. It also means that time spent dealing with junior associate work product is worth less to the firm than it would be for the senior associate just to do all of the work to begin with.

In my counseling work it has become clear to me that humans are deeply influenced by feedback received. We do what works and repeat until it no longer works consistently enough that it is worth the extra effort to find a new way. An example I often give my clients is: if I want my husband to do the dishes, one way to get him to do the dishes is to scream at him. Long term it’s not effective if my goal is to have a happy marriage, but short term it’s certainly effective at getting the dishes done. The more times it gets the dishes done, the more it seems logical in my brain screaming = dishes done. Therefore, I’m more likely to scream earlier and with less provocation about getting the dishes done because they become linked in my mind. Over time, it can come to feel like the ONLY way to get the dishes done is to scream.

But then my marriage would be in trouble because I’m screaming all the time, my husband feels aggrieved and hurt and, apart from having sparkling clean dishes, no one is happy or connected.

The billable hour is the equivalent of the scream to get the dishes done. That, coupled with the fact that most of the lawyers running law firms are not MBAs who think about management practices and techniques as a driving force of their lives, leads to some pretty inefficient and unfortunate responses to that scream. Sure, the dishes are sparkling and partners and associates are well-compensated for their long hours of labor, but a lot of people end up feeling aggrieved, hurt, and definitely unappreciated.

Law firm partners end up in charge of a huge enterprise after years of being focused on a niche area of the law.  No one in charge of a firm has ever been incentivized to manage their juniors – it wasn’t worth it because their hours needed to be written off anyway.   Human management factors, as well, are often overlooked by partners who have built careers on practical, end-focused advice.  When managing a transaction, lawyers are not concerned with the effects of different management choices on the employees of the companies involved – their job is to advise the company about what is legally allowed based on the statues or regulations or to draft a clause that reflects what is agreed.  This attitude often carries over into managing a firm – the partner in charge will focus on the rules and reputation of the firm and the bottom line.

This is not meant to depict parters as heartless or uncaring. They aren’t. I’ve worked for partners who were dedicated and caring towards their associates, who gave them time to learn and to try new things. Who wanted to teach and to develop the talents of junior associates.

The other factor to consider is that most partners at most firms are paid ONLY a share of profits.  If the firm does not turn a profit (meaning after associates are paid, rent is paid, staff is paid, all expenses are paid), then partners earn nothing.  Happiness of associates, in a short term sense, because it adds to costs doesn’t necessarily result in a partner taking home any money for the year.  This is different from a large corporation where a CEO, while possibly grossly overpaid in comparison to the workers, receives an agreed salary even if the company earns less which allows them to consider things like satisfaction and retention of employees when budgeting and considering expenses.  While long term, firms would be wise to consider themselves as ongoing enterprises and places of work, sometimes the partners in charge just need to keep the revenue up and expenses down in order for partners to take home any pay at the end of the year.

This is all a very long-winded explanation for why firms are hard to change.  Why they can seem short sighted and conservative.  It’s understandable, if not objectively from an outside view, the best way.  Historically, law firms were ways to pool together independent practitioners and share the costs of some communal services needed to manage their practices.  

I believe members of law firms, though, think quite a lot about how firms can operate differently in the future. How to make them more resemble companies and less collections of independent practitioners they were initially created to be. They are multi-national businesses and need to be run as ongoing enterprises with long term plans, employee retention, training, and satisfaction as key. The way to this outcome, likely, is the loss of the billable hour. Already clients are demanding a change in many places – flat fees are becoming more common. A flat fee, absent billable hours, might encourage many many more hours of junior associate labor and training time. If usage rates and other internal firm metrics evaluating individual matter profitability weren’t influenced by just letting junior associates work on things for as long as it took, partners and senior associates might be more willing to sacrifice efficiency for knowledge building and employee growth and development. Under a flat fee, a senior associate could spend 2 hours revising and offering feedback to a junior associate who spent 8 hours trying the assignment and have it be no different to the client than if the senior associate just spent 4 hours doing the work while the junior did nothing. However, this would require firms to look at this junior work as overhead rather than work for that specific client.

As a business not wedded to the billable hour, firms could focus on things like mindfulness of employee health and seeking to encourage innovation and avoid burn out.

The other component, most likely, is a change in partner compensation.  Which might not be possible under the traditional legal partnership model.  Innovation and thought about structure is important because the very structure of the law firm, as it exists today, is impractical for these considerations.  I’m not arguing that partners should earn less or that they’re not deserving of their compensation.  But the incentives as they currently exist are not always in line with the goals of the individual partners.  I think individual partners want to train their junior associates.  I think individual partners want to think about satisfaction and well-being and retention.  I think individual partners want to allocate work in ways that allows growth and allows foreseeability of work flow and ensures even allocation and distribution of responsibilities.

I just think they’re too busy, under the current structure, trying to get the dishes done to focus on the long term effect on the marriage of firm and associate.

Published by alexm1008

I am a Licensed Professional Counselor practicing in Houston, Texas. I specialize in helping clients develop skills and strategies to feel more in control of their emotions and behaviors. I am also a wife and mother of two who loves to run and travel (particularly to Disney World with my kids and without).

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