Banning the Billable Hour

Entrepreneurs have long complained about legal fees. Now an entrepreneurial law firm in Boston is attempting to change the way lawyers charge for business, by banning the vaunted billable hour. "[T]he Shepherd Law Group is one of the few firms to voluntarily abandon the billable hour system entirely," reports the Boston Globe.

"Shepherd, a five-lawyer firm that specializes in employment law, charges its clients a flat annual fee or flat price per task. Clients can call the firm as often as they want to discuss legal issues, although some services, such as training and litigation, cost extra. The new approach helps clients determine legal costs in advance and often prevents legal problems from escalating because clients are no longer reluctant to seek advice out of fear of incurring a hefty bill, said Jay Shepherd, the firm's founder."

Shepherd goes on to tell the paper that he finds hourly billing to be a productivity killer, because it makes more sense for a lawyer to handle matters slowly and to rack up extra hourly fees. The paper notes that some firms offer clients alternative fee structures such as contingency fees and volume discounts, but that the billable hour is by far the most common means of charging for legal services. Shepherd says that, so far, his firm's ban has been accepted by clients.

To read the rest of the Globe's article, click here.

What do you think? Do you wish your lawyer would change his or her pricing? If so, how should lawyers charge?

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman