15. The problems of excessive
billing targets
To the extent that hourly billing presents arbitrary and unclear choices about how much, if any, time to record in various circumstances, lawyers are more likely to veer on the side of recording more when firms require attorneys to bill massive numbers of hours in order to remain employed. That raises the question about what number of billable hours is reasonable.
The production-line mentality
There is no doubt that the number of billable hours worked has risen over the past 20 years. This has come about as a natural consequence of the legal profession regarding “hours” as the basic measure of performance and productivity. Just as the owner of a factory wants its machines to produce more widgets, so the partners in a law firm want the lawyers on their payroll to bill more hours.
The point was made effectively by the late Chief Justice William Rehnquist, who observed in the mid-1980s that law firms bent on making as much money as possible treat associates “very much as a manufacturer would treat a purchase of one hundred tons of scrap metal.” (William H. Rehnquist, The Legal Profession Today, 62 Ind. L.J. 151, 153 (1987).) He explained the prevailing attitude like this: “If you use anything less than the one hundred tons you paid for, you are simply not running an efficient business.”
The traditional 1,300-hour assumption
A study by the American Bar Association in 1958 — when the billable hour was advancing, but not yet triumphant — reportedly found that there were approximately 1,300 fee-earning hours in a year (this assumed that a lawyer worked half-day Saturdays). (I have found numerous references to this study while researching this book, but its name and author(s) have proved elusive.)
Let’s assume that you work 48 weeks a year, allowing for vacations, national holidays, sickness, and so forth. The ABA’s 1,300-hour number works out at just under five hours per day on the assumption of a 5.5-day week or around 5.4 hours if you amortize it over a five-day week.
The thought of anything close to a five-hour day may seem absurdly gentlemanly and leisurely to many who work in the legal profession. But the thinking behind the ABA’s number was that there is, inevitably, a lot of unbillable time in a lawyer’s day.
A commonly expressed view is that lawyers need to spend about three hours in the office for every two hours of billable time. The “unbillable hour” is taken up with all sorts of activities, such as dealing with administrative tasks, having lunch, shooting the breeze with colleagues, looking for things buried under piles of paper, recording time, dealing with personal matters — not to mention being distracted by bookmarks on the Internet. On that basis, the five-hour day requires a 7.5-hour commitment — which still sounds pretty civilized.
Anyone reading this book can tell that I do not favor aggressive billing. Nonetheless, I suspect that the ABA’s 1,300 hour number is on the low side as a benchmark for the legal profession as a whole — and I’m not sure that a new ABA study on the subject would come up with the same number today.
That number can make sense for a solo practitioner — especially since a solo lawyer will have to spend a fair amount of time running the practice as well as working on client matters. But it is unrealistically low for a full-time associate in a larger law firm whose involvement in practice management is going to be very limited. If ever the era of the 1,300-hour target did exist in law firms, it is not going to return. Maybe it should. But it won’t.
How about 1,600-1,700 hours?
My view is that an annual target for an associate of around 1,600-1,700 hours is a reasonable compromise between the needs of law firms and individual lawyers to make money and the concern that excessive hours cause problems.
Here’s how I get to that range. Again, I’ll start with the assumption that a lawyer will work 48 weeks of the year. Let’s assume that the lawyer is in the office — with enough work — on average from 8:30 AM until 6:00 PM. That’s a total of 8.5 hours.
I recognize that some readers who rarely get out of the office before 9:00 PM will be rolling their eyes at this point. But I have never accepted that there is something about the practice of law that means that, come what may — even without the pressure of urgent deadlines — one has to work well into the night, every night, in order to do the job properly.
Good dentists don’t go on drilling past the dinner hour when there aren’t emergencies. Good attorneys need not go on lawyering that late either. Moreover, just as I wouldn’t want my root canal done by a tired dentist, why should I — as a client — have my lease prepared by a worn-out lawyer?
It’s one thing working late when the needs of the client demand it. And, often, a client’s needs do. But the problem with the types of high billable hour targets that have become common in recent years is that they assume that lawyers will work long shifts regardless of the work they are doing. To stay on target, the lawyer has to work late even on matters that aren’t especially pressing. The long hours are dictated not by the needs of the client, but by the revenue expectations of the law firm.
Anyway, back to my calculation of why 1,600-1,700 billable hours per year is reasonable, although not unchallenging. I suspect that most lawyers — assuming they have enough work and especially if they are not too heavily engaged in practice management — can do a bit better than billing two hours out of every three.
So I’m going to allow 6.5 hours as an average day’s billing working those hours, which makes for 32.5 hours in a week. And I’ll round that up to 35 hours, allowing for some longer days or work on weekends. Multiply that by 48 and you’ve got a total of 1,680 hours — call it 1,700 for good measure.
But I’ve worked out other scenarios where I end up with closer to 1,600 hours — and maybe less. For example, without that extra 2.5 hours per week that I threw into the calculation above, the total was 1,560.
The fact is that there is no objectively ideal number. However, I think that when one works the numbers of what is reasonable, civilized, and sustainable, while at the same time providing lawyers at all levels of the profession the opportunity to earn decent incomes, one tends to get something more or less in the 1,600-1,700 range. That is enough to be challenging, but not so high as to be soul-destroying or to virtually invite aggressive and suspect billing practices.
Heavy billers: 2,000+ billable hours a year
The reality, however, is that relatively few law firms set annual targets of 1,600 hours. A target of 1,700 is considered on the low side, and even 1,900 is middling. Those who aspire to be high fliers and earn the big bucks in private practice — especially in major markets — generally aim to work at firms where expectations of hours are in excess of 2,000 — 2,200, 2,400, and even beyond.
How is it even possible to bill that number of hours? One answer is that when dealing with all of the judgment calls about how to record time — the ones that have been discussed in this book — the lawyer has a huge personal incentive to come down on the side of charging the extra minutes.
This is how the two strands of the billable hours controversy intertwine. Some people focus on excessive hours as the essence of the problem; I, by contrast, believe that the billable-hour system is intrinsically flawed no matter how few or many hours are billed.
But, at the end, the two issues feed off one another: The system of counting hours leads to ever higher expectations about numbers of hours; and those expectations encourage lawyers to exploit the billable-hour system — with all of its anomalies and gray areas — in a way that makes it easiest for them to meet their elevated targets.
Life over 2,000 hours a year
But there is a limit to what can be done by aggressive billing alone. In order to be on the fast track in private practice in major markets, there is no doubt that a lawyer has to work very long hours indeed. And remember to get your flu shot — falling sick could play havoc with your career.
Let’s consider what billing 2,200 hours actually involves. Doing the math, the lawyer who needs 2,200 billable hours over 48 weeks has to record an average of 45.8 hours per week, or about 9.2 hours per weekday. (Maybe you can get that down a bit if you make it up on weekends or skip vacations. But you get the picture. And, by the way, I’m assuming no padding.)
A “45-hour week” might not sound too bad. But remember that we’re not talking about “a 45-hour week.” We’re talking about recording 45.8 hours of billable time.
In order to bill 9.2 hours a day, you’ll very likely need to be on duty for a minimum of 12 hours a day — and probably longer.
Those types of hours aren’t just when you’re swamped — that’s the normal work day. And if you don’t have the work to fill those hours, you get panicked.
Add commute times and you’re talking about selling your soul to the firm. If you have small children, you’ll probably rarely put them to bed on weeknights — let alone have dinner with them.
But, even then, you might be panicking that you’re not “performing” well enough. You know that some associates are billing 2,400 hours — and then there are the legendary stories of those who make it to 2,600. They are the true heroes, the ones certain to make partner.
Coyness about minimums
The firms that talk openly about their billing requirements tend to be those that boast how reasonable they are — the ones with targets set at around 1,600-1,700 hours.
Very few — if any — law firms publicly set minimum billing targets of over 2,000 hours. Often, in fact, big law firms state that they do not have “minimums.”
However, the reality of working for them is that the expectations are there. The unofficial “minimum” turns out to be the number of hours you need to bill to get a bonus — and the real “targets” are the levels you need to reach in order to get the higher levels of bonus.
If you choose simply to opt out of the bonus rush, you’ll very likely be opting out of the partner track — and, quite possibly, out of continued employment at the firm.
The money rush
The lawyer who bills 2,200 hours is going to be handsomely paid. Starting salaries for first-year lawyers at top law firms in 2007 were as high as $160,000 — and that’s before bonuses. The bonuses typically kick in at around 2,000 hours, sometimes 1,900 — but the highest bonuses are for the higher numbers of hours.
Lawyers generally get yearly raises as they climb the seven-to-ten year path toward partnership — so a relatively new lawyer working for a top law firm can quickly make over $200,000 with salary and bonuses combined.
The new lawyers want the salaries. It’s not just a matter of greed — it’s also a matter of dealing with law school debt, not to mention enjoying a share of life’s creature comforts.
The sharp rises in the expectations of what lawyers should earn that occurred in the past 20 years has been driven, in part, by the earnings of those who work in the financial services sector, which competes with the legal profession to recruit the brightest and the best. With investment bankers pulling in the truly big bucks, the legal profession had to offer better deals in order to tempt enough talent to want to make a career based on a bar card.
And the partners want the profits they will make off the new lawyers’ time — a lawyer who bills 2,200 hours a year at, say, $350 per hour, stands to bring in $770,000 in revenue, less whatever gets written off. An army of bright, young things bringing in $350 an hour well into the night makes for very handsome incomes for their bosses.
Law firms indeed vie for top placements on profits-per-partner league tables, the most successful passing the $1 million-a-year mark.
Large law firms are structured like pyramids, with those at the top living off those underneath, the underlings performing sweat labor in the hope that they, too — one day — will climb toward the top and be allowed to profit from those below.
But the tickets up the pyramid are handed out only to those who earn their passage by stellar billing. Their motivation during the long nights of hard slog is that, some day, they will be invited to profit from the labor of tomorrow’s pawns — those who, right now, are in law school, perhaps entertaining dreamy visions of law and social justice, but who, before long, will be drawn into the billing treadmill, tempted by the riches and egged on by the flattery of the recruitment process. Those newcomers will fill the places vacated by the lawyers who didn’t make it or couldn’t stand it, as well as by the much smaller number who did manage to make partner.
The system works on the assumption that most who are on the treadmill will never get to enjoy the riches. It’s a matter of simple arithmetic: the higher the ratio of associates to partners, the larger the profit per partner is going to be. Law firms have an incentive to appoint only as many partners as they need to ensure that they recruit sufficient talent into the trenches and have a sufficient number of people vested in the firm so that it is properly managed, stable, and making rain.
Beyond that, it is better for the partnership if a lot of associates drop out and are replaced — especially as they reach the higher levels of associate salaries. So large law firms are happy to run a work regime that many will find unbearable. They want only the fittest to survive.
That said, life on top of the pyramid is not necessarily a bed of roses. The California Bar Journal reported in 2007 that even senior lawyers in big firms sometimes faced expectations of 2,200 hours a year — “or else.” (California Bar Journal, “Growing, and Graying, Attorney Population Hits Retirement Age,” July 2007.)
Are there such things as kinder-and-gentler law firms? Yes, but they tend to be smaller and mid-size ones.
The anxiety of life on the billing treadmill
Thus, from the beginning — and, perhaps, until the end — lawyers are under huge pressure to bill. This creates stress on a daily basis.
The new lawyer, in particular, operates under a mandate to record all time, but — often — with an instinct that much of that time really should not be billed. But one cannot afford to under-record time, because that would mean falling behind on targets — and once one makes a habit of that, it’s very hard to catch up. And, perhaps, one comforts oneself with the thought that time recorded as “billable” is not necessarily “billed” — although usually it is, and one may never know either way.
The pressures and anxieties that all this creates were eloquently summed up in a blog entry by someone who now describes herself as a “recovering lawyer,” but who previously operated in the world of “BigLaw” (a term often used to describe big law firms serving mostly big corporate interests):
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“You fumble around on a project feeling like a complete idiot, with time ticking away, and at the end of two and a half hours you’ve been down half a dozen blind alleys and have half a paragraph of tepid conclusions and realize you don’t really understand what you’re supposed to be doing anyway. Do you bill that 2.5 hours? On the one hand, great, 2.5 hours, that’s a nice big chunk of billable time — great! I hope this will take me a lot longer to finish up. On the other hand, you realize, someone’s going to look at this piece of paper and think, “We’ve hired us a complete idiot! It took her 2.5 hours to do this simple project, and she’s still not finished.” Maybe you should only write down 1 hour. But where are you going to get the other 1.5 hours? Stay later? What if while you’re trying to catch up you’re only slightly less clueless? You can see how anxiety-producing it all is.” (Extracted from a posting titled “Billable Hours” made in 2004 in a now-inactive blog called “Stay of Execution” written by someone with a pen name of Scheherazade. Reproduced under that blog’s Creative Commons License.)
The anxiety often doesn’t go away. And so long as you have to meet a stiff hours requirement, any day on which you fall behind creates a need to make up. And if you slip much behind the curve, it’s hard to get back on top. It’s stressful.
There’s “good stress” and there’s “bad stress” in the practice of law. “Good stress” comes from the demanding nature of the work. If you aren’t feeling that sort of stress, it may mean that you aren’t challenging yourself. “Bad stress,” by contrast, has to do with reaching your hours target and the various political issues that go with it. That one can do without.
Entire contents © 2008 John Derrick