The Billable Hour, The Supreme Court and a Dog's Tail | | In Search of Perfect Client Service

We now know who to blame for the billable hour. Or at least who to blame for its perpetuation.

According to former Kirkland partner Steve Harper in The Belly of the Beast:

Yet it survives because it has powerful defenders, including the Supreme Court’s conservative five-man majority. Yes, the obstacles facing those seeking better days are that formidable.

The lawyers in Perdue v. Kenny A sued on behalf of children in Georgia’s state-run foster care program. After eight years, the trial court awarded attorneys fees under the federal statute permitting winning plaintiffs to recover from the losers in such cases. In its April 2010 ruling, the Supreme Court adopted a rule that, ultimately, will reduce that monetary award by several million dollars.

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Importantly, the Court rejected the argument “that departures from hourly billing are becoming more common.” It noted that “if hourly billing becomes unusual, an alternative to the lodestar method [hours worked times billing rate] may have to be found. However, neither the respondents nor their amici contend that that day has arrived.”

From this, Harper concludes:

As a result, lawyers maximizing their chances for court approval of their fees will adhere to hourly billing. Innovators experiment at their peril because, depending on the type of matter, they risk not getting paid. The Supreme Court’s imprimatur on the billable hour regime creates a perpetual loop that won’t help the profession jettison it.

I don’t have statistics on this, but I am guessing that out of all of the fees paid in litigation, maybe a hundredth of one percent (one thousandth of one percent?) ever find their way into court for approval. The phrase “tail wagging the dog” immediately came to my mind. But on reflection, that phrase doesn’t do justice here. To get proportions correct, it would have to the “the last hair at the end of the tail wagging the dog.”

Having tried to put the argument into perspective, I do not question the idea that lawyers will jump on this to defend their adherence to the billable hour. Given some of the arguments I have heard over the years from people desperate to defend the billable hour, I have long sense stopped expecting perspective.

http://www.thebellyofthebeast.wordpress.com Steven Harper

You might want to qualify your “guess” concerning the insignificance of cases requiring court approval of attorneys fees. Such matters are not limited to fee-shifting litigation — and lower courts will likewise not so confine the Supreme Court’s recent opinion. As noted in my article, all bankruptcy fee petitions require federal court approval. Large firms with significant restructuring practices have made big money throughout the Great Recession — so much that the media occasionally reports on it. (See, e.g., May 1, 2010 NY Times: “Who Knew Bankruptcy Paid So Well?”)
So the Court’s recent opinion reaches far beyond the “last hair on end of the dog’s tail.” Indeed, that’s the problem with it. The Supreme Court isn’t responsible for the billable hour regime and all the bad things it produces, but it’s helping to entrench the system. Of course, clients and their attorneys remain free to fashion their own deals. But that won’t solve the other problem I identified: firms will continue to use billable hours as an internal evaluation metric. They already do.