The billable hour: Indiana law firms consider billing alternatives.

• Author: Murphy, Nathan Scott
• Position: Includes related article

Grisham's tale of Harvard Law grad Mitch McDeere's unsettling introduction to the practice of law and life at Bendini, Lambert & Locke is fiction in its best-selling form.

But behind Mitch's story is a real and growing debate about the way lawyers bill their clients. Firms across Indiana and the nation are looking hard at the "billable hour," which for more than 30 years has been the standard method of charging for legal services.

In the 1950s, lawyers billed clients on a case-by-case basis. They calculated their fees using a number of factors, including the client's ability to pay, the lawyer's relationship to the client and the lawyer's subjective estimate of the service's value. The billable hour was adopted as an easily understood translation of the value of a lawyer's work.

"I've been in the practice of law for 20 years, and it's been the primary method," says David Campbell, managing partner at Bingham Summers Welsh & Spilman in Indianapolis. "It's easily understood and not unique to the lawyer. There is a truth in the saying that a lawyer's time is his stock in trade."

And while the billable hour has been the standard now for some time, opinions are beginning to change again. "I've heard that in the '70s, clients didn't even know the hourly rate they were paying," says Jeffery Johnson, managing partner at May Oberfell & Lorber in South Bend. "Clients aren't intimidated these days to call a lawyer about a bill question. I think it's healthy."

"Everyone has a right to ask about their billing," says Robert Mann, member of the management committee at Andrews Harrell Mann Chapman & Coyne in Bloomington. "And the person better have a clear explanation."

Johnson, however, says some alternatives to the billable hour can be dangerous because they can encourage competition solely on price. "I see a pitfall," he says. "I can see a firm, if they bid a certain fee to get to a certain client, pushing down the quality of legal representation to a level where it might be improperly handled. The system of the billable hour isn't the problem, it's the people. There is potential for abuse in any system."

The billable hour system assumes that lawyers, guided by their own integrity and professional ethical rules, will work efficiently.

"It assumes the lawyer is spending his time reasonably," says Larry Stroble, managing partner at Barnes & Thornburg in Indianapolis. "But you can ask, what is 'efficiency'? If I spend four or five hours on a legal theory...