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Billable Hours, How I loathe thee.

Discussion in 'General Chat' started by Renault78law, May 5, 2006.

  1. zarathustra

    zarathustra Senior member

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    I was being facetious--somewhat. We're all getting less hours than we'd like. At this pace, I question how anyone can hope to make bonus.

    mafoo -- are you locked into your practice class there?
     
  2. mafoofan

    mafoofan Senior member Dubiously Honored

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    mafoo -- are you locked into your practice class there?

    More or less, yes. My group is actually busier than most, anyway.
     
  3. RJman

    RJman Senior member Dubiously Honored

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    I was being facetious--somewhat. We're all getting less hours than we'd like. At this pace, I question how anyone can hope to make bonus.
    make?


    or should I say, bonus? This year?
     
  4. gdl203

    gdl203 Senior member Dubiously Honored Affiliate Vendor

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    Switch to investment banking. You'll work just as hard, get paid more, and there's no billable hours bullshit.

    Since the thread was revived, let us ponder on this past statement... How things have changed! [​IMG]
     
  5. DNW

    DNW Senior member

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    A flat fee regime gives the client a better bargaining position. It's much easier to shop around, especially if the work is the cookie-cutter kind. I don't see law firms giving up this kind of power until they're desperate, or until they're much better at estimating labor costs.
     
  6. mafoofan

    mafoofan Senior member Dubiously Honored

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    make?


    or should I say, bonus? This year?


    So you know what I mean.
     
  7. RJman

    RJman Senior member Dubiously Honored

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    So you know what I mean.

    No. My ideal would be to be a superlative generalist. And I believe in lockstep compensation.

    But I feel your pain. No one is safe right now. You are very junior, so they have incentives to keep you around -- training and you are relatively cheap.
     
  8. odoreater

    odoreater Senior member

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    A flat fee regime gives the client a better bargaining position. It's much easier to shop around, especially if the work is the cookie-cutter kind. I don't see law firms giving up this kind of power until they're desperate, or until they're much better at estimating labor costs.

    Like I said in the other thread,in some areas, it's impossible to estimate fees - especially in litigation.
     
  9. style from the heartland

    style from the heartland Senior member

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    Any associates here making markedly more than 33% of what they bill for their firm ? Does this rule-of-thumb still hold ?

    I'm working for a small firm in a small city, so we're not talking $150 k /$450 k, BTW.
     
  10. lawyerdad

    lawyerdad Senior member

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    Like I said in the other thread,in some areas, it's impossible to estimate fees - especially in litigation.

    I agree somewhat, but this is something of an overstatement. You can never predict with absolute certainty, but in many cases you can make a reasonable estimate of what the litigation costs will be up to various benchmarks (resolving the pleadings, discovery, through trial, etc.)

    There are also a variety of ways of hedging or sharing the risk (that is, the client and firm sharing) of substantial mis-estimations. That said, because of the inherent unpredictability odoreater alludes to, I think flat fee or similar arrangements Iin litigation settings) likely will work best where there is an ongoing relationship, or for very cookie-cutter work.
     
  11. odoreater

    odoreater Senior member

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    I agree somewhat, but this is something of an overstatement. You can never predict with absolute certainty, but in many cases you can make a reasonable estimate of what the litigation costs will be up to various benchmarks (resolving the pleadings, discovery, through trial, etc.)

    There are also a variety of ways of hedging or sharing the risk (that is, the client and firm sharing) of substantial mis-estimations. That said, because of the inherent unpredictability odoreater alludes to, I think flat fee or similar arrangements Iin litigation settings) likely will work best where there is an ongoing relationship, or for very cookie-cutter work.


    On an internet forum, all you get is an overstatement [​IMG] I've prepared "budgets" for clients before that will look something like this: Preparation of pleadings - $2000; Written Discovery - $5000 (with a stipulation that this does not include expert costs); Depositions - $5000, etc.

    However, I've very rarely had a situation where the budget was actually adhered to or didn't have to be significantly revised after the case has been ongoing for a while.

    I don't think I would ever contract with a client to actually handle any aspect of litigation for a flat fee (unless the fee was so high that it would be impossible to go above it).

    Here's a recent example of why it's very difficult to estimate litigation costs. I had a case where a plaintiff sued my client, and I filed an answer, counterclaim and a third party complaint against an entity related to the plaintiff. From this point, the plaintiff and third-party defendant would have to file an answer and the pleading stage would be done. However, neither party filed an answer. So, I had to file a motion to enter default. Both parties opposed the motion so I had to prepare reply papers. The Court denied my motion and gave them leave to answer. A few months later, I get a notice from the court that my third-party complaint has been dismissed for lack of prosecution - turns out they never actually filed the answer they attached to their motion papers. So, I had to file a motion to restore my complaint. That motion was granted. A few months later, they still haven't filed an answer, so I had to file another motion to enter default, this time also asking for sanctions. The Court denied my motion to enter default and again gave them leave to answer, but did grant my motion for sanctions. The catch was that the court only awarded me about 1/5 of the fees and costs my client incurred just to get these guys to file an answer.

    Had we agreed that we would do the pleading stage for a fixed some, we would have lost a lot of money.
     
  12. jgold47

    jgold47 Senior member

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    I did billable consulting for a couple of years, pretty stock projects for the same client over 20+ years at that point, so a grasp of the costs were pretty solid. Switched to a flat fee, and everyone loved it. Finally you could work at a legit pace, by the time you got good, the projects were banked to have about 45 hours with of time, instead of dragging them on and on and on to meet your target, you could get them done in the 5 hours they really took, and the rest was all profits. Not sure if there was an audit clause either.
     
  13. abc123

    abc123 Senior member

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    I did billable consulting for a couple of years, pretty stock projects for the same client over 20+ years at that point, so a grasp of the costs were pretty solid. Switched to a flat fee, and everyone loved it. Finally you could work at a legit pace, by the time you got good, the projects were banked to have about 45 hours with of time, instead of dragging them on and on and on to meet your target, you could get them done in the 5 hours they really took, and the rest was all profits. Not sure if there was an audit clause either.

    As another slave to billable hours (a consultant, not a lawyer), I've got to agree that these types of projects are way, way better. I had one engagement (federal client) where my hours were set at 45 a week, no more or less regardless of time actually "worked" and it was the best couple months of my short career. In at 8, out at 5, no stress, guaranteed to keep my utilization high, etc. Now I am back on projects that bill strictly by the hour, and I hate my job again[​IMG]
     
  14. crazyquik

    crazyquik Senior member

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    I could see some appeals being done on a flat fee.
     
  15. lawyerdad

    lawyerdad Senior member

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    On an internet forum, all you get is an overstatement [​IMG] I've prepared "budgets" for clients before that will look something like this: Preparation of pleadings - $2000; Written Discovery - $5000 (with a stipulation that this does not include expert costs); Depositions - $5000, etc.

    However, I've very rarely had a situation where the budget was actually adhered to or didn't have to be significantly revised after the case has been ongoing for a while.

    I don't think I would ever contract with a client to actually handle any aspect of litigation for a flat fee (unless the fee was so high that it would be impossible to go above it).

    Here's a recent example of why it's very difficult to estimate litigation costs. I had a case where a plaintiff sued my client, and I filed an answer, counterclaim and a third party complaint against an entity related to the plaintiff. From this point, the plaintiff and third-party defendant would have to file an answer and the pleading stage would be done. However, neither party filed an answer. So, I had to file a motion to enter default. Both parties opposed the motion so I had to prepare reply papers. The Court denied my motion and gave them leave to answer. A few months later, I get a notice from the court that my third-party complaint has been dismissed for lack of prosecution - turns out they never actually filed the answer they attached to their motion papers. So, I had to file a motion to restore my complaint. That motion was granted. A few months later, they still haven't filed an answer, so I had to file another motion to enter default, this time also asking for sanctions. The Court denied my motion to enter default and again gave them leave to answer, but did grant my motion for sanctions. The catch was that the court only awarded me about 1/5 of the fees and costs my client incurred just to get these guys to file an answer.

    Had we agreed that we would do the pleading stage for a fixed some, we would have lost a lot of money.

    Good points. That's why I said I could only really see it working in an ongoing relationship. In that situation, the concept of what a "typical" case might cost has a little more meaning because not every case is going to be an outlier. Plus, if you have an ongoing relationship, there's some incentive and hopefully some trust and good faith to deal with aberrations and perhaps share some of the risk of "misunderestimation".

    Everyone makes their own judgments, but if I were hanging out my shingle I'd at least consider doing flat fees on some case (although you'd want to build in some limits or contractual outs). Obviously, you'd have to price appropriately so that efficiency (and/or fortuity) reaps you sufficient rewards that balance out the risks of spending more time than you anticipated. Ultimately, it's just a question of business judgment. But especially if you're working at less than capacity anyway, the "cost" of missing by a bit on the projection may be manageable (I would certainly insist that hard costs be paid at cost with the flat rate being limited to actual legal fees). If you need cashflow to make your monthly nut, you need the cashflow.
    I could see some appeals being done on a flat fee.

    Yes, I've done this, and I think it's relatively common (at least compared to cases being litigated at the trial level).
     
  16. crazyquik

    crazyquik Senior member

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    Can you explain criminal law billing? What little I know seems to be they take a large, single, lump sum payment, and then bill everything (legal work, ministerial work, paralegal and secretary work, etc) against that. Is that how high level white collar crime is billed as well? Or do the clients (Enron guys, Bernie Madoff, OJ Simpson, etc) make monthly payments into the retainer trust as it's depleted?
     
  17. LesterSnodgrass

    LesterSnodgrass Senior member

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    Can you explain criminal law billing? What little I know seems to be they take a large, single, lump sum payment, and then bill everything (legal work, ministerial work, paralegal and secretary work, etc) against that. Is that how high level white collar crime is billed as well? Or do the clients (Enron guys, Bernie Madoff, OJ Simpson, etc) make monthly payments into the retainer trust as it's depleted?
    That is my understanding. Criminal cases are dicey for lawyers -- as they progress there is less incentive for the clients (defendants) to keep paying. For some strange reason, I think white collar perps actually think they can pay a good defense lawyer to prevent an indictment from coming done. Occasionally this happens, but it is the exception, not the norm. Technically, once a notice is filed, the court can hold a defense lawyer's feet to the fire and require him to continue to represent the defendant whether he is being compensated or not. I suppose that's why most require a huge retainer upfront. I think most defense lawyers require another big deposit once a case is set for trial.
     
  18. lawyerdad

    lawyerdad Senior member

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    CQ, it can be either. When I was with a firm that did a lot of white collar work, the second arrangement you describe was more common (that is, monthly replenishment of a retainer against which hourly fees were billed, just like in civil cases). There can be a number of reasons why the first may be used, however. If there's a chance that assets in the client's name may be seized or frozen, it's obviously in the firm's interest (and often the client's) to secure as much payment as possible up front. Also, as Lester points out, once an actual case has been filed and the attorney/firm is official counsel of record, judges are sometimes reluctant to let the lawyer out of the case. Again, that's a reason to try to get sufficient payment secured in advance.

    Also, in cases where the defendant is a corporate employee, officer, or director, there may be certain issues implicated in terms of payment of legal fees by the employer or an insurance company. There can be a great variety of scenarios, but suffice it to say that if there is a concern that the payor may stop paying at some point, there's an incentive to get as much money committed early as possible.

    Also, in some situations the firm may request a large up-front, non-refundable ("earned upon receipt") retainer, which may have advantages in the the event of a forfeiture of assets or bankruptcy.

    I agree with Lester that avoiding an indictment that otherwise would be filed is the exception without the rule, but I do believe good representation can often make the difference between being indicted or not in cases that are on the border. At the very least, it can make the difference between an unpleasant outcome and a catastrophic one.
     
  19. jgold47

    jgold47 Senior member

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    That is my understanding. Criminal cases are dicey for lawyers -- as they progress there is less incentive for the clients (defendants) to keep paying. For some strange reason, I think white collar perps actually think they can pay a good defense lawyer to prevent an indictment from coming done. Occasionally this happens, but it is the exception, not the norm. Technically, once a notice is filed, the court can hold a defense lawyer's feet to the fire and require him to continue to represent the defendant whether he is being compensated or not. I suppose that's why most require a huge retainer upfront. I think most defense lawyers require another big deposit once a case is set for trial.

    My dad is a criminal defense attorney. The billing is terrible. You mostly charge lump sums, with a massive retainer upfront. However, like you said, the guy who shot and killed 3 people in cold blood is going to jail, and they could care less about paying their lawyer. Of course, they dont realize that its that same lawyer who got the sentace reduced, charges lowered, etc.... When my dad started out in the 60's, it was him and a bunch of law school buddies, all did criminal work, wide eyed save the world types. Now he's the only one left really, and while he will tell you he is a CDA he mostly does bankruptcies, and DUI's, since he always gets paid.
     

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