Teaching Billing: Metrics of Value in Law Firms and Law Schools

Abstract

In this essay, we explore some of the problems that billing poses for lawyers in practice and in the academy. As our title "teaching billing" suggests, we believe that although billing is a central practice of lawyers, it receives little sustained attention from either law firms or law schools.

We map some of the problems embedded in a call for "truth in billing" and explore some of the conceptual and practical issues raised by the equation of time with value. While the literature on billing tends to focus on the institutional problems and the responses at law firms, we argue that the roles played by courts and law schools in shaping norms of acceptable billing also need to be considered. Judges are interesting participants in this debate. A good deal of law addresses the question of fees, as judges sit in judgment of lawyers' bills when asked to award fees either under statutory fee-shifting provisions or when a common fund is created. On one hand, as some judges campaign for higher salaries, they use law firm partner compensation as exemplary of how much money they are missing. Moreover, some judges resign - attracted by the fees available in the private practice of law or of judging. Yet judges are also public servants who in fact work at salaries less than many of their contemporaries and whose own life choices reflect valuation in terms other than dollars.

When judges rule on lawyers' fees, they express concerns akin to those of regular clients, upset about the large numbers of hours spent and the many lawyers claiming compensation for time on a particular project. Sometimes, judges respond by scouring records to eliminate duplication and, in other instances, by developing means to escape the tedium of oversight by awarding fees independent of the hours spent. Yet hourly bills remain central in the law of fees, in part because of doctrine requiring judges to use that method of value (known as the lodestar) when statutes oblige losing parties to pay their victorious opponents. Therefore, lawyers who rely on statutory fee provisions garner more judicial attention than lawyers able to gain court-awarded fees in antitrust, consumer, or tort aggregates. Yet even in cases in which fees are awarded under the "percentage of the fund" approach, many courts describe themselves as using a "hybrid" method, which compares the dollars netted by the percentage method with how much money would have been paid through a lodestar calculation. Similarly, even those law firms that rely on lock-step compensation systems (rather than linking salaries and bonuses to hours) also obtain and evaluate hourly billing records.

We appreciate efforts to invent alternative forms of billing, both in and out of court. But we conclude that, given how much fee law and law firm practices remain rooted in calculations of time, hourly billing will retain a significant place in lawyers' lives. Therefore, we consider pressures at the individual or institutional levels for change within the rubric of the hourly bill.

Law schools have a good deal at stake in the present system, which creates a market for their students and which helps those students pay law school debt. Because law schools help to generate conditions that support unreflective efforts to bill aggressively, we argue that law schools ought to join in the conversation about the role of hourly billing in shaping concepts of professionalization. In some respects, the terms of such a conversation would be familiar, as law schools are much engaged in discursive reflection about commodification, property rights, and liability rules. But, as we explain, lurking behind the question of hourly billing is the question of hourly law school course credits - for law schools, like law firms, rely on hours as a measure of value. Teaching billing will therefore require legal institutions, be they educational, adjudicative, or service providing, to take on the challenges of exploring the normative implications and pragmatic effects of the practice of measuring the value of lawyers and their education by the number of minutes that they devote to their tasks.