It’s like the mother of all perfect storms.

And, according to the comment section following Bartlitt’s post, this brewing storm is going to hit hard and when it does hold tight.

You probably know the jist of what’s being said, but for those who don’t, read on. (random, un-attributed and paraphrased highlights of the recent discussions)

  • Over staffing and a wage-earning mentality are the anti-thesis of efficiency and merit-based results.
  • With contingency based fees, where the value is low, the cost is low and where the value and quality turns out high the cost is high.
  • With billable hour based fees, if you are successful and win a case early on, you put yourself out of work. If you get bogged down in a land war in Asia, you make more money. That is frankly nuts.
  • When a firm’s business model is based on selling hours rather than results, profitability requires having a lot of hours to sell. Many of those hours can be generated by inexperienced, inefficient hour machines.
  • In a non-billable hour business model, inexperienced associates, [sic] the inefficient hour machines, are a barrier to success. Smaller, more highly experienced teams whose only focus is on winning, quality and efficiency, not generating hours, is essential for success.
  • The ACC Value Challenge seeks to reconnect value to costs for legal services. Our aim is to provide networks, tools, and dialog for both in-house and outside counsel to help us all better manage our clients’ legal affairs.

The business model for delivering legal services in America has a distinct legacy. It has developed through a series of significant transitions particularly those related to how clients are charged. While digging around for sources to support my memory, I found that:

Most of the colonies did not welcome lawyers and did not allow them to practice for they did not trust them. It was hard for a lawyer to make a living in the early colonies; therefore, not many lawyers made the trip from England. In most cases lawyers were not even allowed to charge a fee for representing someone. In extremist colonies, lawyers were not even allowed to practice. When lawyers gained the right to charge for their service, they requested that they be allowed to bargain with the client over a price; this right would not be allotted until the middle of the nineteenth century. Until then the legislative body set the price of what a lawyer would be paid. Most of the time it was a mere pittance.
Excerpt from an article by law students at the University of North Carolina at Pembroke in 2001 that documents Law in Colonial America 1607-1783.

I once was told that lawyers in the mid 19th century billed by the word. Thus we had [and still have today] legal documents that are long and overly wordy. When that became too transparent and clients disapproved, around the early 20th century, lawyers transitioned to billing by the hour. Does the past repeat itself? It’s the 21st century and it’s transparent; hourly billing is a business model that requires lots of hours to be profitable. The quest for those hours is not always in the best interest of the client or even the case.

The storm is brewing and when it hits it’s gonna be ugly, but should leave us with a peaceful landscape, at least for another 75 years until things get transparent again.