There has been a great deal of discussion among legal commentators about the failure of hourly billing for legal services and the need for alternatives. The most recent article I’ve seen is in the CBA’s Jan/Feb issue of National. Although I’m a law student and have never billed a single hour as a lawyer, I have worked for more than a decade as an entrepreneur and I wonder … what are the alternatives, really, but masked versions of hourly billing? Given the limited amount of hours available to work in any day/week/year/lifetime, billing by the job MUST reflect the time that the task requires.
Flat fee services must have caps on the input of resources to succeed as business models and, as a result, will tend to put a floor rather than a ceiling on the cost of any given service. At best, a flat fee will reflect the average amount of time required to perform a service. Innovators can find ways of doing things more quickly through economies of scale, computer processing, outsourcing and so forth, but price reductions that service providers choose to pass on to the clients can be built into an hourly billing model just as easily as any alternative. Innovations might put pressure on hourly rates through competition, but this has nothing to do with the method of billing.
Frankly, I fail to see how alternatives to billing by the hour will change the cost of legal services. The real pressures on cost come from the the well-known forces of the marketplace … the rest is just packaging. And if clients are becoming more sophisticated, will they really be impressed by a fancy one-size-fits-all (unless you want more) gift bag?
The real issue is value. Lawyers that provide it will gain clients and those that do not will lose clients. Those who insist on talking about how the billing is done, please explain (and be nice about it): What am I missing?
Have you read “Bracing for the Big Bang” in the current issue of the National? With luck – “huge” – long-overdue – changes are coming. Much more than hourly billing is on the line. Not so great for the layers – but great for consumers of their services. Currently we are finally seeing some discourse on the anti-competitive practices in Canadian real estate. It would be nice to see an analysis of anti-competitive practices in the context of the ways in which legal services in Canada are structured and dispursed.
Yes, there is much talk about the changes afoot in the U.K.. I’m willing to bet the impact will be evolutionary rather than revolutionary. I’m also not convinced that the changes will make legal services more affordable for the public.
Think of it like cell phones. When we only talk for 35 seconds, we don’t want to be billed for the whole minute. Get it?
No, Jenny, I don’t “get it”. You’re analogy would serve as a better argument AGAINST flat-fee billing models as I understand them.
The issue of anti-competetive practices is embedded in the on-going war between a paralegal and the LSUC (see current Law Times). Lawyers says the anti-competetive aspect of having the LSUC regulate paralegals protects the public from incompetent paralegals. This begs the question – how do we know that paralegals are more prone to substandard representation of clients than are lawyers? No empirical evidence supports this notion. So why not set aside the polemics and take a look. The Carter debacle is a perfect example of a way in which to determine if lawyers are more thorough than paralegals. Simply look at all the cases in which Carter proffered unchecked, unchallenged “expert” testimony or did assessments and count how many paralegals failed to check his qualifications with the CPO – versus how many lawyers. Then ask the LSUC if it is being even-handed in investigating this systemic failure to challenge this unqualified “expert”.