Billable Hours - San Diego Businesses Should Ask How Much Is Too Much?
San Diego businesses should be asking themselves how the "billable hour" law firm culture affects their bottom line. A recent article about a patent holder's defense of a patent infringement action focused on the business's desire not to cave into the demands of what it believed was a patent pirate despite the knowledge in advance that the legal fees would exceed the $400,000 licensing fee sought. Although the battle itself was inspiring, one can't help but be awed by the last paragraph telling the story of the corporation's victory and it's new battle to recover over one million dollars in attorneys' fees.
One million dollars in attorneys' fees! Presumably, this is independent of costs necessary to defend the case. A sole practitioner has to shake his head at the staggering amount. Even experienced litigators prosecuting or defending multimillion dollar cases involving multiple parties and hundreds of attorney hours have to wonder. Law firms will undoubtedly counter that their rates are competitive and that a patent infringement case can easily reach into the 1000 hour range or higher. This is is not unheard of. Five weeks of deposition, five weeks in a document review, law and motion practice, other discovery and a six week trial can easily exceed 1000 hours. A six week trial with multiple attorneys working on the case could alone involve more than 500 attorney hours. Undoubtedly, the stakes are high and corporations are willing to pay big dollars for the right legal representation. Some may feel there is no substitute for the big firm experience. But one million dollars?
Each case is different of course and will have varying levels of complexity. At the heart of this discussion rests two key components: efficiency and incentive. The two components are interdependent. Law firms typically hire young associates who are first and foremost expected to bill a minimum number of hours per year (billable hours). The "billable hour" is the benchmark by which their performance is rated. They are most often raw inexperienced practitioners with little or no practical understanding of the complexities of the cases assigned to them, the procedural time lines important to litigation or the ultimate evidentiary effect of their decisions. Combine this inexperience with the "billable hour" and you have a recipe for inefficiency. Inexperience or not, minimizing attorneys' fees for the client and maximizing billable hours in the real world are mutually exclusive.
One million dollars in attorneys' fees! Presumably, this is independent of costs necessary to defend the case. A sole practitioner has to shake his head at the staggering amount. Even experienced litigators prosecuting or defending multimillion dollar cases involving multiple parties and hundreds of attorney hours have to wonder. Law firms will undoubtedly counter that their rates are competitive and that a patent infringement case can easily reach into the 1000 hour range or higher. This is is not unheard of. Five weeks of deposition, five weeks in a document review, law and motion practice, other discovery and a six week trial can easily exceed 1000 hours. A six week trial with multiple attorneys working on the case could alone involve more than 500 attorney hours. Undoubtedly, the stakes are high and corporations are willing to pay big dollars for the right legal representation. Some may feel there is no substitute for the big firm experience. But one million dollars?
Each case is different of course and will have varying levels of complexity. At the heart of this discussion rests two key components: efficiency and incentive. The two components are interdependent. Law firms typically hire young associates who are first and foremost expected to bill a minimum number of hours per year (billable hours). The "billable hour" is the benchmark by which their performance is rated. They are most often raw inexperienced practitioners with little or no practical understanding of the complexities of the cases assigned to them, the procedural time lines important to litigation or the ultimate evidentiary effect of their decisions. Combine this inexperience with the "billable hour" and you have a recipe for inefficiency. Inexperience or not, minimizing attorneys' fees for the client and maximizing billable hours in the real world are mutually exclusive.Continue reading "Billable Hours - San Diego Businesses Should Ask How Much Is Too Much?" »
