am a lawyer. It wasn’t easy getting here.I spent 7 years and $100,000 going touniversity to get 3 degrees. I passed theBar exams, articled or 10 months, andthen started my own law practice. But nowthat I’ve nally become a member o anesteemed proession, I ind mysel dealingdaily with a negative stigma let by lawyersgone and perpetuated by lawyers present. Tatstigma, as I’m sure you’ve guessed, is legal ees(as characterized by the billable hour) andit’s let a bad taste in the public’s mouth.Te billable hour, perhaps the dening andmost contentious issue surrounding legalservices, is relied on so heavily because lawyersdon’t really know what their services are worthand have little experience in estimating the totalcost o such services. Tere are many unknownvariables which can complicate matters and causeinitial time estimates to become meaningless. Yet the billable hour is an antiquated andunsatisactory valuation method. It deprivesclients o predictability over the costs o legal services. At the same time, it providesthe wrong nancial incentive or lawyers tocontinue working on les (e.g. litigationlawyers who settle disputes early on become poor, while those who drag their eet become rich).Te billable hour can also create other ethical andproessional problems within the lawyer-clientrelationship (e.g. lawyers pad their dockets orail to keep clients inormed o the runningbill). It is also to blame or lawyers’ work-lieimbalance (i.e. working 14 hours a day to bill 8hours). Finally, valuing legal services accordingto the time a lawyer spends working on a lesties innovative billing methods which wouldotherwise allow more people to (perhapssimultaneously) access legal services rom thatsame lawyer. With the emergence o new technologies(e.g. request or quote processes through
beginningto penetrate the mainstream legal servicesindustry, trends towards commoditizationand unbundling will expand. Consumerso legal services will rely more and more ontechnological mediums such as e-mail,internet, smart phones, social networking web-sites, etc., to shop around or the best deals.Tey will look or value-added services romreputable, accessible, and aordable legalservice providers; they will also expect to beable to compare the total costs o such services.In doing so, this new breed o client willcreate opportunities and competitive advantagesor those lawyers who leverage technology topromote themselves and deliver cost-eectivelegal services to the masses. It is in this new par-adigm that the billable hour in its current ormmay evolve to have a much lesser role to play invaluing legal services or cease to exist entirely. With these things said, I wanted to know thecurrent state o legal ees in general – and thebillable hour in particular – in oronto, Ontario,Canada. As such, the purpose o this report wasto survey 500 solo/small rm oronto lawyers tohelp answer the ollowing 7 questions:
How prevalent is the billable hour?
What was the average hourly rate?
How does that rate change based onexperience and primary legal area practiced?
What was their average initialconsultation ee?
How many provided a ree initialconsultation in some orm?
What was the average legal ee or certainbasic services?
What alternatives to hourly billing dothey oer?
We interviewed 500 randomly selectedsolo/small rm oronto lawyers andound that:
Teir average* hourly rate was$338.
Hourly rates ranged rom$78to$750.
Teir average initial consultationee was$338.
64%ofered some orm o reeinitial consultation.
Excluding contingency ees,only 5%ofered alternativesto hourly billing such as xedees, day rates, barter arrangements,quotes, pay-as-you go, perproject, etc.Overall, the predominance o thebillable hour may be challengedas solo/small rm oronto lawyersbegin to leverage technology toprovide legal services in a cost-efectiveand convenient manner to the masses.
* the word “average” means “weighted average”throughout this report
Prepared by:Michael Carabash
Is Time Running Out on theBillableHour?