Best Practice #4: Re-examining the billable hours threshold
Billable hours inevitably play a significant role in the level of partner compensation. Yet two different models exist for taking billable hours into account. One requires all partners to meet a certain billable-hours threshold in order to receive all the credit available for the billable-hours component of attorney compensation, on the theory that billable hours are only one type of contribution partners need to make for firms to flourish. The other system rewards the attorneys who work the most hours, signaling that billing hours is a critical contribution to a firm’s long-term financial viability.
The threshold approach to billable hours was used in only a small minority of our respondents’ firms. The predominant system presumably was one in which attorneys who work the longest hours tend to receive increased compensation even if, for example, a partner could be increasing a firm’s profitability more by leveraging associates better, decreasing unwanted attrition among valued attorneys, or moving from lower- to higher-margin practice areas. Because many more men than women have twoperson careers in which they can rely on their partner to take care of all matters outside of work, a most-hours-wins systems disproportionately disadvantages women partners. In addition, in the opinion of many law firm consultants, systems focused heavily on billable ours not only are not economically justified; they introduce perverse incentives, most notably the hoarding the work and inefficiencies that are detrimental to clients’ interests.
