
A Virginia couple that gave birth to the billable hour - yoloswagins
https://www.ozy.com/true-and-stories/the-virginia-couple-that-gave-birth-to-the-billable-hour/60997/
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hristov
Ok, many problems with this article. First the main theme is just wrong. It is
quite a stretch to say that ruling minimal flat fee schedules illegal led to
the billable hour. Flat fees are still legal and many lawyers use them. It is
only illegal to have the bar association set minimums.

The article is also not quite correct to imply that the billable hour causes
more misery than flat fees. If you have flat fees the partner will make the
most money by forcing an associate to the largest number of flat fee
assignments possible and that would still result in overwork. There are other
worse problems with flat fee arrangements. In a flat fee situation you get
paid the same regardless of how much work you put in, so there is incentive to
finish the task with minimum amount of work. But if you are a perfectionist
and/or a lawyer that takes pride in his work, you will spend extra time to do
the job right when it requires it. And that will make your life extra
miserable because the partner expects you to finish a certain number of tasks
regardless.

So the problem is not billable hours or flat fees, the problem is that the
partner makes money from associates labor and wants to squeeze out as much
labor as possible. This is an issue in many careers of course, but it is
somehow worse in law.

And yes, I have worked in top law firms (if you haven't noticed by the
bitterness) and have worked both for billable hour and for some flat fee
arrangements. I much preferred the billable hour stuff. If you are in a top
firm you can just assume you will get the more difficult assignments so you
shouldn't be taking flat fees.

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anonunivgrad
Not a good article. Plenty of other professions don’t charge by the hour. How
come lawyers do? This article doesn’t tell you. It doesn’t explain why the
billable hour won over flat fees. There’s a whole lot of room between cartel
price-fixing and billable hours. Flat fees are not illegal. Price-fixing is.
If bar associations tried to set minimum hourly rates, that would be price
fixing too. I’m not convinced that the writer even understands this.

~~~
mschuster91
> If bar associations tried to set minimum hourly rates, that would be price
> fixing too.

In Germany, this is the actual way how lawyers operate - anything that ends up
at a civil or criminal court is billed according to the fixed set of the
Rechtsanwaltsvergütungsgesetz (RVG), which means there is a base rate and a
multiplier based on the monetary value of what is being argued over.

Only stuff that fully happens outside of the court system is excepted and
lawyers are free to make their own negotiations.

This ensures a somewhat level playing field in front of courts.

~~~
082349872349872
For HN'ers coming from a common law system: the hours in court are probably
also fewer, because unless the case is unusually complex, they'll only be
arguing about the facts of the matter, not arguing about which precedents to
apply.

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inetsee
The billable hour is not actually an hour; it's more fine-grained than that
[1]. It may vary from one jurisdiction to another, but the example I found
uses 0.1 hour as the increment. The result is that it's possible for a lawyer
to spend 8 hours working, and bill more than 8 hours. E.g. assume a lawyer
calls a client and gets an answering machine. Three minutes on the phone can
be billed at 0.1 hour. Of course, slack time can't be billed, so it probably
evens out.

[1] [https://cand.uscourts.gov/about/court-programs/criminal-
just...](https://cand.uscourts.gov/about/court-programs/criminal-justice-act-
cja/cja-compensation-rates/billing-increment-chart-minutes-to-tenths-of-an-
hour/)

------
hellofunk
A lawyer in Boardwalk Empire, from the 1920s, charges $80 per hour. So
hypothesis disproven.

------
peter_d_sherman
First, I agree with the other posters who suggest that this article might have
flaws with it. It very well might.

But, those aside, let's at the view from 10,000 feet. Let's look at things
from the perspective of pure capitalism...

Buyers of legal/law/lawyer/law firm services, specifically the largest buyers
(large corporations), typically are run by CEO's who have relatively little
knowledge of Law. Oh sure, they might be advised by a Chief Legal Officer /
General Counsel, but then the question is, why are they outsourcing their
"home-team" legal capabilities to large law firms for certain cases?

Well, let's suppose a corporation was sued for millions, heck, _billions_ of
dollars (you remember Carl Sagan, right? "Billions and billions..."? Well,
it's like that, but not with stars in the galaxy, but with dollars in a
lawsuit, directed against your company! <g>)

Here's a good example, "Google v. Oracle America":

[https://en.wikipedia.org/wiki/Google_v._Oracle_America](https://en.wikipedia.org/wiki/Google_v._Oracle_America)

>"Google v. Oracle America (previously named Oracle America, Inc. v. Google,
Inc. in lower courts) is a current legal case within the United States related
to the nature of computer code and copyright law. The dispute centers on the
use of parts of the Java programming language's application programming
interfaces (APIs), which are owned by Oracle (through subsidiary, Oracle
America, Inc., originating from Sun Microsystems), within early versions of
the Android operating system by Google. Google has admitted to using the APIs,
and has since transitioned Android to a copyright-unburdened engine, but
argues their original use of the APIs was within fair use.

Oracle initiated the suit arguing that the APIs were copyrightable, seeking US
_$8.8 billion_ in damages."

OK, so now let's look at things from Google's perspective:

From Google's perspective, $8.8 billion (not million, _8.8 billion_ ) dollars
is on the line.

Is that something that should be kept with Google's home-team legal
department, or outsourced?

Think of this like a giant poker game.

That is, _it might be worth many millions_ (in outsourced legal fees, etc.),
_if the possibility for loss prevention is in the billions_.

Hey, you'd spend a few million dollars of your own money, if it could prevent
you from losing $8.8 billion of your own money, wouldn't you?

I would.

And I don't know anyone else that wouldn't.

So now enter the "Big Legal" law firm.

Big Legal (their sales pitch): "We're the top legal firm, we've served the
following list of corporate clients (insert impressive-sounding list of
corporate clients here), and we have tons of the brightest legal minds, recent
graduates of the nation's top ivy-league law schools that we poached from
other law firms and academia, etc., etc."

Well, from the perspective of the company getting sued, for billions, _what 's
not to love_?

It sounds great, it sounds like the solution!

It sounds like the best defense possible!

With a company like that on your company's side, there's no way your company
could lose! So how much is all of that going to cost?

Big Legal: "Well that's the best part of everything! We'll simply let you rent
X of our brightest legal minds for Y dollars per hour (billable hours!), where
we will take Z% as a percentage (a large percentage!) for the privilege of
your company having used (what amounts to!) our _legal match-making service_!

You know, it's like Fiddler on the Roof: _" Match maker, match maker, make me
a match, find me a find, catch me a catch!"_.

It's like that, except that the Big Legal law firm acts as a matchmaker
between the large corporation who is getting sued, with a lot at stake, and
the legal minds (AKA recent graduates) that they have poached from some of our
nation's top ivy-league law schools...

Then the partners at the Big Legal law firm -- collect the profits on their
matchmaking activities; the difference between the hour billed to the
corporation in legal trouble, and the (much lower!) per hour rate they pay
their recently-poached legal minds.

And thus, the "billable hour" was created -- _as yet another form of trickle-
down "Voodoo" economics._ <g>

>"Hourly billing also pleased clients, who received a clearer look into the
services provided them, though it did not take long for the lawyer’s time
sheet to go from a record-keeping tool to a record-breaking profit generator.
This was accomplished in large part on the back of associates’ labor — billed
out to clients at two to five times their own compensation rate, which meant
that hiring legions of young lawyers became, as one big-firm managing partner
once admitted, “like owning a printing press.”"

Yes, being a partner at a Big Legal / Big Law law firm is _great work -- if
you can get it!_ <g>

(Fun Fact: In Greece, in Athens, a long time ago, while it was permitted for
friends to argue and help argue cases for other friends -- it was against the
law / prohibited -- for someone to earn their living as a professional
Lawyer/Attorney/Bar Association Member.)

(Additional Fun Fact: Getting sued, from a pure economic perspective,
comprises _negative value_.

That is, much like garbage, there's economic value in getting rid of the
thing, but nothing of positive economic value is produced, no goods are
produced, nothing positive happens to the economy, yet (paradoxically) _the
transaction is worth money_...)

~~~
anonunivgrad
> _nothing positive happens to the economy_

I’m not sure that’s true, but perhaps I misunderstand. The lawsuit is the
enforcement mechanism of private law. You can go make contracts and have
pretty good certainty that they will be respected because the threat of the
lawsuit looms in the background. You can confidently ride an elevator or walk
under a crane or take pills from the pharmacy because the implicit threat of a
lawsuit, should you be injured, looms in the minds of the people operating
those services. Every successful lawsuit makes that threat all the more
legitimate.

~~~
peter_d_sherman
A very interesting point!

Yes, that does make sense -- _threat of lawsuit_ should in theory equal
_higher quality goods and services_.

But, I'm sort of 50/50 on it without a little bit of additional proof... It
sounds like it makes sense _prima facie_ , but does it really apply to all
fields of economic endeavor?

The counter argument (and I don't really want to make it, because your
argument is a good one!), if I were to make it, would go something like this:

If you have a system of production, that is a series of people, workmen,
following a series of localized rules (that is the rules and the workflows of
the company), then after those are established (and they could very well be
initially established by a lawsuit or threat of lawsuit), but after those
local rules and workflows are established, then the lawsuit or threat of
lawsuit - really doesn't apply anymore.

Most methods of production in this day and age are systems, that is, they
employ both humans and machines and a series of rules to produce some good or
service of economic value.

Once the rules of the system are established -- the system usually works from
that point on -- much like a computer program.

But, this being said, I do like your argument, and I do find merit in it!

I feel it would be highly worthy to consider your argument in debates of this
nature in the future! There is something to be said for what you're saying!
There's something there that needs to be explored (with evidence and economic
data) further!

