Five steps to killing the billable hour

[Originally posted at Gruntled Employees on 24 June 2008]

The American Bar Association's ABA Journal once again adds to the conversation about the battle against the billable hour. The always-excellent David Gialanella examines "The Skinny on Flat Fees" in the July issue of the magazine. David identifies five steps for law firms looking to drop hourly billing in favor of value pricing:

1. Do your homework.
2. Find a new measure for performance.
3. Stick to your guns.
4. Be a business geek.
5. Don't secretly keep track of time.

He also uncovers the secret of abandoning hourly billing: "The move from billables to flat fees is not just a practical change; it’s a different way of thinking." That's certainly true. It's not about the accounting — it's about delivering value to the client.

While he was researching the issue, Dave and I discussed whether value pricing would be just another also-ran to hourly billing:

The term alternative billing might seem innocent enough, but those two words make Jay Shepherd’s skin crawl. As CEO of Shepherd Law Group in Boston, the enterprising attorney thinks his firm’s flat-fee business model is not simply an alternative to the billable-hour standard: It eventually will become the commonplace way to run a law practice.

He's right: alternative billing is not my term of choice. A year-and-a-half ago in "No-alternative billing," talking about law firms' resistance to offering value pricing, I admitted:

I hate the term "alternative billing." It has that sneering, look-down-your-nose quality to it, like "alternative lifestyle."

And many law firms still think of it that way.

BTW, Dave had another nice piece in the February issue of the ABA Journal: "Taming the Billable Beast."