Stanislav Roth

Why dumping billable hours targets is missing the point

target

Clients want to pay for value, not time. I believe that lawyers need to do away with the antiquated target system,  prevailing culture in place.

 

 

The recent announcement from national firm Corrs that they are dumping billable hours targets for their lawyers was heralded as an innovative step, aimed at supporting a high-performance culture and flexibility for staff. While this move is commendable, the blunt reality is that while the target goes, the billable hours stay. In other words, every six minutes is still being counted and charged; clients are still paying for time, not value. When will clients of major law firms start to see real innovation in legal services delivery?

Eliminating daily billable hours targets will come as a relief for lawyers. And society too. Much research over recent years regarding the mental health of the legal profession has painted a picture of extraordinary rates of depression and suicide, attributed to relentless, unrealistic expectations. Removing targets is naturally going to lead to improved wellbeing outcomes, and it couldn’t come soon enough.

But if the conversation here is about innovation, then getting rid of daily targets barely rates a mention. It’s simply tinkering at the edges of the age-old method of charging clients for time spent. It does nothing to overcome the gulf between what lawyers do and what business needs.

Do businesses want to pay for the clock ticking on a lawyer’s desk? Do they want highly complex, lengthy contracts that are beyond the comprehension of most people, or legal advice that is convoluted and ends with the risk ultimately sitting with the organisation anyway? No, but that is what most lawyers give.

Lawyers are there to solve problems, navigate issues and maximise opportunities for their clients. When that becomes the focus – rather than measuring time spent – clients stand to gain not only huge cost savings, but more importantly gain a legal business partner.


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What businesses want is certainty, expertise and solutions, aligned to the pace of business today. In a single word: value.

While most lawyers continue to charge by the hour, businesses really want to pay for the value of the service they get, i.e., a piece of timely advice, a robustly negotiated contract, a resolved dispute.

When everything from a logo design to highly complex infrastructure projects can be delivered at an agreed cost, why should the professional services sector be immune from value-based pricing? Why does the legal industry stand aloof and disconnected from most businesses’ reality? Why should businesses pay for time, when what it wants are outcomes?

From my experience as a lawyer, moving away from the pressure of 6-minute billing and focusing instead on creating value generates an entirely different way of working. It enables you to be more productive, more focused on what is really important (i.e., service to the client) and generally freer and happier. The skyrocketing mental health issues across the legal industry are just one symptom of the fundamentally flawed approach of the traditional way of practising law. The shift of smaller “NewLaw” firms to alternative business models is another.

When will the larger firms follow suit? Not any time soon I suspect, while they can continue to extract huge sums of money from their clients by charging for time. It really is going to take the business community – particularly the clients of the large law firms – to demand change.

If businesses want real innovation in the way they receive and pay for their legal services, they should ask for it from their lawyers, because large law firms are far too comfortable to lead the way. It’s time to acknowledge that law firms need to bridge the gulf that exists between what lawyers do and what businesses need.

 


 

Stanislav Roth

Stanislav is the founder and managing director of Source Legal. Stanislav advises and represents numerous clients in the construction, infrastructure, mining services and labour hire industries, including Brookfield, Pybar and Ambition Group. Prior to establishing Source Legal, Stanislav worked in senior in-house legal roles with leading multinational engineering, energy and construction companies – Alstom, Areva and Lend Lease.

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