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What's the Point of Billable Rates?

posted by Adam Levitin

Felix Salmon has a very insightful post about lawyers' hourly billing rates.  His take:

differences in billable rates are basically an accounting fiction, which is used to come up with a calculable final figure to be presented as the bill, but which do not actually reflect the difference in value between various strata of lawyers. 

This sounds right to me, but it raises the question about for whose benefit the accounting fiction is done? Is this something general counsel's offices particularly care about when outsourcing legal work? I would assume that they care about the bottom line cost, not about how it is divvied up.  

In the bankruptcy world, of course, there is the endless obsession with fees, and it would seem that this is all for the benefit of the UST and judges. This leads me to wonder about the total cost of preparing timesheets for court approval. Is the cost of this preparation greater than the money that the policing saves? Is it possible to move away from the hourly structure in a debtor representation?

Comments

When I practiced before the BK courts, I was sometimes in charge of getting the team's billing in order. The difficult portion was mostly upfront in getting attorneys who were not usually in the habit of recording the minutia of their day to do so. For example, it was considered insufficient (and likely to result in a challenge by the UST) if you "clumped" your time. So, you could not just note 5 hours were spent giving "attention to xyz matter." Instead, you were required to record .3 hours "emails to client re abc aspect of xyz matter", 1.5 hours "researching abc aspect", etc.

Although recording your time this way was a bit more time consuming, it was hardly a substantial cost. And far less time consuming (and less ethically fraught) than doing it all after-the-fact.

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