Why Dumping Billable Hours Targets is Missing The Point

By Stanislav Roth
This article was originally published in The Big Smoke

The recent announcement from a national law firm that they are dumping billable hours targets for their lawyers was heralded as an innovative step, aimed at supporting a high-performance culture and flexibility for staff. While this move is commendable, the blunt reality is that while the target goes, the billable hours stay. When will clients of major law firms start to see real innovation in legal services delivery?

Eliminating daily billable hours targets will come as a relief for lawyers. And society too. Much research over recent years regarding the mental health of the legal profession has painted a picture of extraordinary rates of depression and suicide, attributed to relentless, unrealistic expectations. Removing targets is naturally going to lead to improved wellbeing outcomes, and it couldn’t come soon enough.

But if the conversation here is about innovation, then getting rid of daily targets barely rates a mention. It’s simply tinkering at the edges of the age-old method of charging clients for time spent. It does nothing to overcome the gulf between what lawyers do and what businesses need.

Do businesses want to pay for the clock ticking on a lawyer’s desk? Do they want complex, lengthy contracts that are beyond the comprehension of most people, or legal advice that is convoluted and ends with the risk ultimately sitting with them anyway? No, but that is what most lawyers give.

Lawyers should be there to solve problems, navigate issues and maximise opportunities for their clients. When that becomes the focus – rather than measuring time spent – clients stand to gain not only huge cost savings, but more importantly a legal business partner.

What businesses want is certainty, expertise and solutions, aligned to the pace of business today. In a single word: value.

While most lawyers continue to charge by the hour, businesses really want to pay for the value of the service they get, i.e. a piece of timely advice, a robustly negotiated contract, a resolved dispute.

When everything from a logo design to highly complex infrastructure projects can be delivered at an agreed cost, why should the professional services sector be immune from value-based pricing? Why does the legal industry stand aloof and disconnected from most business’ reality? Why should businesses pay for time, when what they want are outcomes?

From my experience as a lawyer, moving away from the pressure of 6-minute billing and focusing instead of creating value generates an entirely different way of working. It enables you to be more productive, more focused on what is really important (i.e. service to the client) and generally freer and happier. The skyrocketing mental health issues across the legal industry are just one symptom of the fundamentally flawed approach of the traditional way of practising law. The shift of smaller ‘NewLaw’ firms to alternative business models is another.

When will the larger firms follow suit? Not any time soon I suspect, while they can continue to extract huge sums of money from their clients by charging for time. It really is going to take the business community – particularly the clients of the large law firms – to demand change. As Mike Quartararo says in this article, “…any real change must be driven by clients (i.e., the corporations shelling out $300 billion annually for legal services).”

If businesses want real innovation in the way they receive and pay for their legal services, they should ask for it from their lawyers, because large law firms are far too comfortable to lead the way.


About Source Legal

Source Legal is a multi-award-winning disruptor within the legal industry, differentiating itself by offering its legal services at an agreed price, always. Source Legal was created in 2010 and operates as an outsourced legal department for SMEs, acting as their de-facto, in-house lawyers, providing fast, practical and agreed price legal support. sourcelegal.com.au

Source Legal has been recognised for its innovative approach, being named 2018 ‘Legal Services Champion’ at the Small Business Championships Awards, overall ‘Business of the Year’ and ‘Professional Services Business of the Year’ in the Optus MyBusiness Awards in late 2017, recognised at number 41 in the SmartCompany 2017 Smart50 Top Innovator list, and number 6 in the Anthill SMART 100 index of Australia’s most innovative companies.

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