I have been to several meetings with different clients these past few weeks. There’s always the usual comment of lawyers billing by the hour and why is it that I wasn’t doing it.
I’m usually tempted to explain the long (and flawed) history of hourly billing thanks to reportedly a Harvard Lawyer who promoted it after being so influenced with the zetgeist of management engineering in the 1920s (think Peter Drucker). The lawyer determines his hourly rate then multiply it with the number of hours spent for a client. That’s the gist.
The flaw is that the hourly billing places the client and the lawyer at odds with each other with the wrong behavior being incentivized.
The client rushes conversations afraid of the running meter than making sure he is communicating important information. On the other hand, the lawyer finds himself usually in a conflicting position on whether to solve the problem fast or not.
If that’s not enough to get you, there’s the usual eyebrow raising from the client doubting the 20 hours on the bill and the lawyer feeling insulted by any remark that questions his integrity (the how dare you kind).
Yes, the hourly billing does more harm than good in the lawyer-client relationship. If their interests are to be aligned, they have to understand the nature of their relationship and transaction.
They are partners in value creation.
Partners enjoy each other’s trust and confidence. They know that they have each other’s back. If things get tough, they can rely on the other to get through the challenge.
The client and the lawyer are creating something valuable together through the engagement. The client experiences quality legal services, while the lawyer receives equitable compensation for services rendered.
Hence, the client and the lawyer have to mutually agree on the value of the services through the price.
This is where the right client and the right lawyer comes in. If either one is missing, getting to the right price is almost impossible. One of them will feel slighted.
Hence, it is important to know where they stand when it comes to value as it will be crucial to the question if they can become partners.