The standard model of attorney compensation at big firms is to pay attorneys a fixed salary with an expectation that the attorney will bill at least 2,000 hours a year. If the attorney does not meet the target, the firm will lose profitability and the attorney might lose job security. If the attorney meets or exceeds the target, then they might be eligible for a bonus in excess of their salary. In the past few years, associate salaries and bonuses have been pretty healthy.
The incentives for attorneys in such a compensation model are perverse. For example, a client may appreciate that an attorney only spent 10 hours drafting a motion since their bill will be lower than if the attorney spent 30 hours doing the same work. But that attorney will be at a disadvantage billing only 10 hours since the extra 20 hours will help them meet their billing target. I’m not saying the attorney has to lie about his time (although it’s no secret there are bad eggs who do this), but he can just work slower or less efficiently. Who couldn’t rewrite paragraphs over and over again to make them “perfect”? Heck, the firm is not going to complain about getting an extra 20 hours x $600/hour or $12,000 in revenue either, unless the client makes a fuss!
Or what if the attorney has been slow and there are only two months left in the billing year and they need another 425 hours to hit their target. If they fall short, the firm might decide not to award them the market bonus of $75k for their class year. Sure, they will probably scramble to get work, but will they be tempted to add in a few hours here and there and blame their faulty memory? Or if they truly forgot how many hours they worked last Wednesday, will the accounting be resolved in their favor, or the client’s?
The bottom line is under the existing compensation model, the average associate or attorney is going to try to maximize their compensation since the firm maximizes their domination over said associate. When the focus is to clock as many billable hours as possible, the interests of the client can fall by the wayside.
Checks and balances really are not put in place on a consistent basis. I was responsible for reviewing draft bills for certain clients. I would write off time from bills as appropriate, but I can tell you it is very difficult to audit time entries even for fellow team members. Especially when 15 billers are on the bill. Who knows what level of scrutiny other attorneys apply to their bills, even within the same firm. Chronic overbillers are rarely punished as time that gets written off is often charged against the partner bringing in the work, not the associate who billed the time, as the assumption is that the time was properly entered and is being cut for budgetary reasons.
Is there a solution to this problem that might be available to someone who isn’t in the typical situation of a big firm lawyer?