Of Time and Lawtalk

Thanks so much to Eugene Volokh for the invitation to guest blog about Lawtalk:  Unknown Stories Behind Familiar Legal Expressions this week.  Working on the book was tons of fun (and a dramatic lesson in the amount of historical material now available online), and my co-authors and I are enjoying the opportunity to share what we’ve learned with those who are interested.  Today’s topic is time, both in the sense of the provenance of legal expressions and as a measuring stick for legal fees.

In many cases, we discovered that law-related expressions are much older than people generally believe, and older than the earliest cites in the Oxford English Dictionary.  For example, I initially bought into the myth that Los Angeles police chief William H. Parker coined the phrase thin blue line in the 1950s (thanks, Wikipedia).  Not true:  in its laudatory metaphorical form (referring to the police as a line protecting the citizenry from crime), we traced this play on “thin red line” (referring to red-coated British soldiers in the Crimean War) back to a speech given by the Bishop of Coventry to the annual meeting of supporters of the Birmingham Police Institute in 1900–and as a literal reference to lines of policemen, all the way back to 1855.

A different kind of surprise, though, was how comparatively new the expression billable hour is.  In fact, billable in this sense is even now absent from the OED; it has the word only as a legal term meaning “liable to be served with a bill; indictable,” and its only cite is from 1579. Billable as an accounting term meaning ‘something one can bill for’ seems well established by the turn of the twentieth century, although LexisNexis shows the earliest case law use of this version of billable in a 1929 case, and the earliest billable hour (actually “non-billable hours”) in 1947 – and neither instance is about lawyers.

Lawyers didn’t always bill by the hour (and some still do not). Early twentieth century lawyers used various methods for billing clients. Some matters were billed at a flat rate, some on a percentage basis, and many used a method called value billing. Bills were sent only sporadically and were not itemized, noting only “for services rendered.”

By the 1920s, state and local bar associations began to publish minimum fee schedules, listing the appropriate charge for various kinds of legal matters.   For example, the schedule would “suggest” one fee for handling a real estate closing, another for drafting a will, and yet another for a contested divorce.  Lawyers ignored these schedules at their peril, as habitual under-charging could be treated as professional misconduct.

A mid-century movement toward “legal economics” marked a shift to charging for time rather than tasks.  In 1940, Reginald Heber Smith wrote four articles for the American Bar Association Journal advocating a more organized approach to law firm management. Among other things, he recommended monitoring and documenting lawyer productivity through “Daily Time Sheet” forms.

Then in 1957 the ABA created the Committee on Economics of Law Practice, and in 1958 went on a crusade to promote hourly billing with its pamphlet, The 1958 Lawyer and His 1938 Dollar.  This tract pointed out that lawyers who kept track of their time and billed clients accordingly made more money than those who did not. (It also noted that lawyers’ earnings had failed to keep up with those of doctors and dentists). The problem, said the ABA, was that by concentrating on “devotion to public interest,” lawyers were failing as businessmen, and that they should start recording and charging for their time, their “sole expendable asset.”  State bar associations responded, as when a committee of the Wisconsin State Bar calculated in 1959 that an average billing rate of $18 per hour was necessary to sustain a net return of $14,500 per year.

The ABA’s efforts continued into the 1960s.  The Committee published a series of pamphlets covering many phases of law practice management, culminating in the 1962 Lawyer’s Handbook.  In 1966 the President of the ABA noted that 35,000 lawyers had copies of the handbook, but he still worried that too many lawyers failed to use efficient practice methods to assure an “adequate economic return.”  It was during this period that billing by the hour gradually caught on, spreading from large firms to small ones, and by the late 1970s hourly billing became the norm.

The term billable hour seems to have crept into legal vocabulary only as its adoption as a billing method became established. A 1968 case is the first to use “billable hour” with respect to lawyers, and it uses quotation marks and defines the term. It seems likely, though, that bar association meetings and publications were the earliest adopters of this lingo, and those sources (including a law student letter to the editor) routinely used billable hour without explanation by the early 1970s.  As late as 1975, however, the author of an article in the journal Legal Economics still felt the need to explain “the ‘billable hour’ concept.”

Today the billable hour is very much in the news.  Just last week the online ABA Journal reported that a law firm associate claimed he was fired for refusing to fraudulently bill 3,000 hours a year, and its weekly survey question asked “How many hours will you bill in 2011?”

But has there really been much change?  A 2007 survey showed a slight increase in alternative billing methods, and the protracted economic recession that began in December of that year encouraged further rethinking of billing practices, with the result that some large law firms report using flat rate billing or other methods more often nowadays.  But the billable hour remained firmly entrenched. As one industry observer was quoted as saying in 2007, “alternative fees are like teenage sex. There are more people talking about it than doing it, and those that are doing it don’t know what they’re doing.”