This may surprise many lawyers working today, but the billable hour has not always been the standard for charging for legal work. Until the 1975 U.S. Supreme Court decision in Goldfarb v. Virginia State Bar, fees were decided by discussions between a lawyer and a client based on a county bar association’s minimum fee schedule. Goldfarb and the Federal Trade Commission killed the minimum fee schedule, and today attorneys bill between 1,700 and 2,300 hours annually.
Then there’s the dark side of the billable hour, Skaddenomics. In the 1990s, Skaddenomics became code for billing clients for expenses like long-distance calls—or even luxury hotels. Though the name was inspired by the firm Skadden, Arps, Slate, Meagher & Flom, the practices are common across the legal field.
In 2004, Tyco International invited law firms to craft new and different models for its litigation work. That may have been a response to questionable billing practices; it was certainly part of the business philosophy of cutting costs. And it opened the discussion of alternative billing methods—from flat fees to sliding scales to incentives and punishments—that continues today as it slowly grows in use.
Attribution: Image from Shutterstock.com.