« Cramdown and the Cost of Mortgage Credit | Main | Why No Prosecutions »

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?


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.

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.