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Should we be 'Calling time on the billable hour'?

The billable hour has been the standard payment method within the legal market for decades, regardless of its hotly debated pros and cons. However, we are now seeing an increase in work taking place through alternative billing. Our report, 'Calling time on the billable hour' spoke to lawyers, law firms and their clients for opinions on pricing structures and how this can impact work-life balances and building relationships.  

Does the secret to a better work-life balance lie in flexible payment methods? 

It’s no secret that stress in the workplace has steadily increased over the past few decades. Lawyers are now the second most stressed professionals in the country. Targets for billable hours have long been the standard measure of performance for lawyers, and ‘Calling time on the billable hour’ showed targets can range from 800 to 2,000+ hours per year. Coupled, with the average working day being 10 hours for a junior lawyer in the UK and 14 in the US, you have to ask the question, is this the most effective and efficient way to work?

In our article, ‘Is your billing structure causing your lawyers to leave’, Brad Wine, Global Co-Chair of Litigation at top 50 US firm Morrison & Foerster said: “One of the issues that really defines this new generation of lawyers is that they are really focused on their own mental health and wellness. That means we need to make sure we’re not burning people out and we need to make sure we’re providing associates with the tools they need to manage the stress that comes with this job.” 

Find out how Lexis+ can reduce stress by saving more than 8 minutes per legal task. 

It’s clear higher stress levels lead to burnout and a loss in productivity, LawCare’s ‘’ reports more than 60% of lawyers surveyed in the UK and Ireland said they had recently experienced mental health issues and their well-being was suffering. Part of the problem may lie in the billable hours model. 

In the report, one very senior lawyer, who has worked both in private practice and in-house, said: “The billable hour is horrible from a mental well-being perspective because you always have this general level of anxiety and stress…no matter how much amazing work you’re doing, if you’re not putting in those long hours, you’re not seen as being committed and you’re not going to progress in the law firm.”

Taking time to build relationships 

There’s a huge desire to be able to develop relationships with clients through time autonomy and prove the value added for the client. This provides a path to build long-term business relationships, ensuring repeat custom. 

In ’Calling time on the billable hour’, Georgia Dawson, Senior Partner at global law firm Freshfields Bruckhaus Deringer said: “The billable hour has been a foundational aspect of the way professional services firms have structured themselves…any pivot away from that is naturally going to take time. That said…there’s definitely been more of a pivot towards alternative fee arrangements and other structures, where clients are looking for more certainty of cost.”

For any services-based industry, client satisfaction is the key to success. Clients want to find a cost-effective solution which adds value, even more so now the Covid-19 pandemic has drastically changed the way we work.

Exploring the alternatives 

A recent survey from stated 43% of UK law firms are now offering alternative fees, such as fixed or capped fees. But, alternative billing methods are not a one-size fits all answer. In some cases, there’s a great result for the law firm, with resource savings compared to an hourly rate. However, the reverse is also possible, where there is a significant resource cost and a higher workload. For example, a recent survey found that 64% of law firms using alternative billing meant an increase in write-offs.

In our article, 'How law firms can maximise billings from their lawyers', we discuss how to ensure a positive outcome, overcome challenges and reduce stress when implementing accurate, alternative billing structures for differing client needs. Pricing needs to be competitive and realistic, and client expectations need to be closely managed. 

But what does this mean for me and my team?

Ultimately any move to alternative billing methods has the potential to reduce stress, improve mental wellbeing and increase productivity. In ’Calling time on the billable hour’, we detail how removing billable hours has a trickle-down effect in removing the necessity for timesheets. More hours are not always a good thing. The pressure to hit number-based targets, without any true qualitative evaluation and feedback is one of the biggest causes of stress for lawyers. 

By moving away from this traditional model to evaluating performance through client satisfaction, trust level and repeat business, individuals are encouraged to build meaningful relationships, where neither party is consistently checking the clock. 

Discover more about the potential end of billable hours, along with alternative billing methods and how you can utilise this opportunity to better support your teams’ mental well-being, reduce stress and ultimately increase productivity and client satisfaction. 

Download and read ‘Calling time on the billable hour’ now.