Rethinking the Billable Hour – Is It Time for a Change?

Maizie Lawrence*

If time is money, then lawyers are basically walking price tags. But I can’t help but ask: at what cost? Every six-minute increment of work is tracked. Every task is assigned a dollar value. Every second is more valuable than the last. But again: at what cost? Inefficiency? Exhaustion? Burnout? It’s no wonder lawyers always feel like there just aren’t enough hours in the day.

The billable hour does have its advantages: it can enhance productivity and break down the client’s bill by each item with the respective time taken to complete each item. It also has its downfalls. It encourages longer hours, inefficiency, and endurance over well-being. Maybe it is time for a change.

The billable hour emerged in the twentieth century as a way to standardize legal fees, bringing transparency to what was once an arbitrary system.¹ The ABA model rules in effect through 1969 advised that it was “unethical for an attorney to undervalue his legal services.”² Firms needed a way to measure productivity while also tracking revenue and ensuring profitability.³ The reasoning was straightforward: time equaled work, and work led to profit. But at some point, the equation got lost in translation. Now, the reverse has become reality: work dictates time, and time dictates profit.

For decades, the billable hour has defined how legal work is performed, rewarded, and even perceived, most commonly in big law practice. Ironically, the billable hour stemmed from work in legal aid, by a man named Reginald Heber Smith.⁴ Before his time, lawyers billed by fixed fees or contingency fees, but it was uncommon for a lawyer to itemize their services.⁵ By the 1980s, the billable hour had become the standard across law firms.⁶ We are now in an age where clients want predictable prices, lawyers constantly experience burnout, and technology and AI are reshaping to industry. So, the question remains: Is the billable hour still the best way to do business?

The Problem

Billable hour requirements are—almost unreachably—high. Most large firms set annual targets averaging two thousand billable hours.⁷ That might not sound unreasonable until you realize that “billable” doesn’t mean “actual” hours worked. It means they’re working closer to three thousand hours when factoring in non-billables like administrative tasks, networking, and firm meetings.⁸

This grind takes a toll. Studies show that lawyers experience higher rates of anxiety, depression, and substance abuse than professionals in other industries. The American Bar Association’s study on lawyer well-being found that of the nearly thirteen thousand currently-practicing lawyers participating in the study, about 29 percent qualify as problem drinkers, 28 percent struggle with depression, 19 percent with anxiety, and 23 percent with stress.⁹ It’s not just young associates who struggle. Even partners, despite their seniority, are trapped in the same system with their compensation tied to how many hours they can log. Beyond that, law students already begin feeling these pressures in law school—before work product and billable hours are expectations.

It’s no surprise that many lawyers leave larger firms in search of a better “work-life balance,” especially in light of the recent pandemic.¹⁰

The Client Perspective

It’s not just lawyers who suffer. Clients are also set back by billable hours.¹¹ It’s like hiring a contractor to renovate your home and being told they’ll charge you per hour, with no estimate of how long it will take. That’s how clients likely feel about legal fees.

The billable hour is a jumble of interests with many puzzle pieces that don’t quite fit together. Clients want efficient, effective legal solutions. However, law firms make more money when cases take longer. This doesn’t mean lawyers are intentionally dragging their feet, but the system itself rewards inefficiency. Even well-meaning attorneys face the ethical dilemma of balancing client service with financial needs.

Predictable legal costs are increasing in demand. General counsels at major corporations are pushing back against hourly billing, demanding alternative arrangements that better align with their business goals.¹² In an era where technology can automate many, if not most, tasks, the argument that lawyers must bill endless hours to prove their expertise is becoming less prominent.¹³

The Alternatives

Slowly, but surely, firms are experimenting with new billing models that benefit both lawyers and clients. This is good news, although change happens quite slowly in the legal field.

Flat Fees¹⁴

Instead of tracking time, firms charge a set price for a service, like $5,000 for a contract or $50,000 for a merger. This model rewards efficiency, gives clients cost predictability, and allows lawyers to focus on strategy and innovation instead of watching the clock.

A challenge with this is that legal matters aren’t predictable. Billable hours would not have become the standard if legal prices could be simplified and fixed to certain numbers. The complexity has firms worried about undercharging for cases that turn messy and long.

Performance Incentive Fees¹⁵

Here, firms charge based on results, not time. A firm handling a corporate acquisition might charge a percentage of the deal’s value, rather than an hourly rate. In litigation, success fees where a lawyer earns more if they win are another form of value-based pricing—this is called contingency fees.

This is more of a win-win: clients pay for outcomes and firms are incentivized to deliver good results. However, the challenge again is the unpredictable nature of legal matters.

Subscription-Based Fees¹⁶

This would be like Netflix, but for legal services. The firms would be offering monthly or yearly legal memberships, where clients pay a fixed fee for ongoing support. This would work well for small businesses, startups, and corporate clients who need legal help often but don’t want to deal with the uncertainty of hourly billing. The downfall here is the obvious —it wouldn’t work well for clients who need one-time support.

Blended Fees¹⁷

It’s becoming more popular for firms to mix the billing methods. They may charge flat fees for routine work and hourly rates for complex cases. This approach allows for more flexibility while reducing the worst parts of the billable hours. Blended pricing would be a good way for firms to wean off of billable hours, while still holding on to what they’ve always known.

Overall, it’s difficult to change something that is so deeply rooted in legal practice. Even though clients get the short end of the stick with billable hours, they still may see it as transparent and helpful. For law firms, change means risk in profit—something that no one wants to deal with. More firms, however, are realizing that billable hours aren’t all that sustainable.¹⁸ In today’s world, younger lawyers are seeking more “work-life balance,” which puts a spark to the flame for law firms who still want to retain quality young lawyers.

It might be time to stop measuring legal expertise in six-minute increments and start seeing lawyers as more than just walking price tags.

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* Maizie Lawrence, J.D. Candidate, University of St. Thomas School of Law Class of 2026 (Associate Editor).

1. Stuart L. Pardau, Bill, Baby, Bill: How the Billable Hour Emerged as the Primary Method of Attorney Fee Generation and Why Early Reports of Its Demise May Be Greatly Exaggerated, 50 Idaho L. Rev. 1 (2014). ↩︎
2. Id. at 3. ↩︎
3. Id. ↩︎
4. James W. Jones, How Law Firms Ended Up With the Billable Hour Model, Thomson Reuters (Feb. 11, 2025), https://www.thomsonreuters.com/en-us/posts/legal/billable-hour-history/. ↩︎
5. Id. ↩︎
6. Id. ↩︎
7. Update on Associate Hours Worked, NALP Bulletin (May 2016), https://www.nalp.org/0516research?s=billable%20hours%20required. ↩︎
8. How Many Hours Do Lawyers Work?, LawRank (Mar. 18, 2024), https://lawrank.com/how-many-hours-lawyers-work/. ↩︎
9. Patrick R. Krill, Ryan Johnson, & Linda Albert, The Prevalence of Substance Use and Other Mental Health Concerns Among American Attorneys, 10 J. Addiction Med. 46 (2016). ↩︎
10. Erin Brereton, How Law Firms Are Achieving Billable Hour Success, Legal Management, (Feb. 2024), https://www.alanet.org/legal-management/2024/february/features/how-law-firms-are-achieving-billable-hour-success. ↩︎
11. Susan Saab Fortney, The Billable Hours Derby: Empirical Data on the Problems and Pressure Point, 33 Fordham Urb. L.J. 171 (2005). ↩︎
12. Id. ↩︎
13. Bloomberg Law, The Future of the Legal Industry (2022), https://assets.bbhub.io/bna/sites/7/2021/12/Bloomberg-Law-2022-The-Future-of-the-Legal-Industry.pdf. ↩︎
14. Sharon Miki, Alternative Fee Arrangements for Law Firms: 9 Examples, Clio Blog (Nov. 22, 2024) (originally published Aug. 2021), https://www.clio.com/blog/alternative-fee-arrangements/. ↩︎
15. Id. ↩︎
16. Id. ↩︎
17. Id. ↩︎
18. Id. ↩︎