Will the Billable Hour Go the Way of the Law Library? (Perspective)

July 28, 2016, 8:14 PM

Editor’s Note: The authors of this post work at an appellate boutique in Southern California.

It is no secret that technological innovations have dramatically transformed law firms and law practice. We recently had occasion to pause and reflect on this transformation—and its impact on clients—when our 32-lawyer appellate boutique decided to move to a newer, more modern, and more efficient (smaller) office space.

When we designed our old suite 30 years ago, dozens of linear feet of shelf space were devoted to hard-bound copies of case reports and treatises. New volumes arrived weekly. Books spilled out of our spacious library and lined our hallways. Our lawyers spent much of their days in the library, the firm’s de facto social hub.

When we designed our new office, we recognized that we no longer need the bound volumes. They’ve been gathering dust since we adopted online research years ago. Apparently, no one else needs them either. As we packed for the big move, we searched high and low for a book-buyer. No takers. We searched for a charity willing to accept a donation. Again, no luck. We finally found a recycler willing to take the books off our hands, at no charge!

The floor plan for our new office includes a space called “Library,” but it will probably function mostly as a meeting room. The social hubs in our new office will likely be the kitchen and a collaborative work room that, in another sign of the times, resembles a Starbucks more than a law library.

And in contrast to our old floor plan, our new floor plan devotes almost no space to file cabinets. Our paper files have been digitized, and we are now a “paperless” firm.

The disappearance of books and paper files is not the only reason our firm requires less space these days. Volumes have been written about the impact of technology on law firms’ personnel needs. Thirty years ago, each of our legal assistants (we called them “secretaries” then) served one or, at most, two lawyers. Today, a 1:4 ratio is not unusual. And some law firms now operate without any staff or, for that matter, office space. Attorneys working from home form virtual law firms.

How do all these changes affect clients? The reduced need for office space and personnel means reduced overhead, though those savings are partially offset by the cost of the latest digital tools. Technology greatly reduces billable hours required for research and other tasks. But when a task that once took twenty hours now requires only two, firms may seek ways to make up the lost revenue, especially with the recent escalation in starting salaries for associates.

Continually increasing hourly rates probably is not an effective long-term strategy, except for those lucky firms whose clients are insensitive to costs. Since the great recession, most clients have resisted rate increases. This resistance manifests itself in various ways. Clients with clout simply refuse to agree to the increases, or negotiate smaller increases.

Other clients dictate how their matters should be staffed, demanding the attorneys they deem most efficient or experienced. Still others request alternatives to the traditional billable hour, such as flat fees. Because appeals tend to follow a predictable course and the tasks can be fairly identified and quantified in advance, our firm has embraced the world of flat fees more comfortably than many of our friends in the trial bar.

So as our firm adapts to our new physical and technological environment, we also find ourselves adapting to the changing legal marketplace. As the era of expansive law firm libraries and file rooms goes the way of typewritten briefs, perhaps the billable hour will too.

To read more articles log in.

Learn more about a Bloomberg Law subscription.