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Legal Fees

Putting In Time

Back when I started practicing law, I used to record my time on a docket sheet stapled to the inside front cover of each file.  When it came time to bill the file, all of the information that I needed was there for me to use, but I was the only one who had it.  Firm management did not have it.  They could not tell me that my docketed time for the month was too low, or that I had recorded less time than last month or how my work in process compared to the same month of the year before.  They could not easily compare my docketed time to what I had billed and tell me that my write-offs were too high, and they certainly could not look at my work in process and easily tell me how I was doing compared to other associates.

In that far distant past, lawyers kept track of their time to provide useful information as to how much to bill their clients, but they only used it as a guide.  They also thought about other things, such as how much experience they had in that type of work, whether they started their draft with a good precedent, how efficient their work had been, the success that their efforts had met with, and even whether their client needed a break due to their financial position.  Then they settled on a reasonable fee and sent out their bill.

Back in those days, a lawyer who was not billing “enough” was eventually going to get in trouble with management, but at least they would experience some peace and quiet before the axe fell, free of monthly reminders of all of the different ways in which they were failing to be financially successful.

While I can certainly see the advantages to having an early warning system to alert you that something wicked your way comes and to help you learn how to be more financially efficient, there was also something nice about being able to work away in peace oblivious to your shortcomings.

But it seems that with every step forward in efficiency in life and business, there is a step backward as well, a point which was beautifully made in my favourite play, Inherit the Wind, which premiered in 1955.  The story is about a famous legal trial and was written by Jerome Lawrence and Robert Edwin Lee. Addressing the jury, the lawyer says:

Gentlemen, progress has never been a bargain.  You have to pay for it. Sometimes I think that there’s a man behind the counter who says, “All right, you can have a telephone, but you’ll have to give up privacy, the charm of distance.  Madam, you may vote; but at a price; you lose the right to retreat behind a powder-puff or a petticoat; Mister, you may conquer the air, but the birds will lose their wonder, and the clouds will smell of gasoline.

The disadvantage to management having instant access to all of this information pertaining to the docketing and billing habits of lawyers, is that it creates a relentless pressure on lawyers to meet docketing and billing targets, and not to exceed write-down allowances. 

I can understand why a lawyer who is receiving monthly reports highlighting where they are falling short would choose to bill all of their recorded time even if they were not operating at peak efficiency at the time, or the decision to spend hours doing research proved to be a bad one, or their law clerk or student went off in the wrong direction due to their own inexperience or perhaps because the lawyer was too stressed to provide proper instructions.

The Rules of Professional Conduct of The Law Society of Ontario say that legal fees must be “fair and reasonable” and provides some guidance as to what is “fair and reasonable” by saying that it will depend upon a list of factors.  The list includes the time and effort required and spent, the difficulty of the matter and the importance of the matter to the client, whether special skill or service has been required, the amount involved or the value of the subject-matter, the results obtained and the experience and ability of the lawyer.

There was a time when most lawyers routinely thought about the list of factors (which quite notably does not include anything about simply billing all of the time that is recorded on the computer) and came up with an amount that was fair in the circumstances.  I know for a fact that many lawyers still do that today, as they are supposed to.  However, I am equally certain that there are also many lawyers who routinely bill the amount that is recorded in their accounting software without much thought about it.

The days when the vast majority of lawyers put a great deal of thought into what constitutes reasonable billing as opposed to simply billing whatever time has been docketed on the computer have been lost to progress and the pressure on them to meet budgets.  

One wonders whether the Law Society should update its rules to match what is going on in real life.

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