Can Law Firms Measure Productivity Without Billable Hours?
Although the billable hour still seems to be the gold standard when it comes to legal billing, businesses and individual clients that have been paying billable hour rates are starting to realize that the gold standard died long ago.
While litigators may need to keep track of their time if an attorney fee motion is even remotely plausible, law firms moving away from charging clients by the hour might want to start thinking about how they measure individual attorneys' productivity. As pointed out on Lawyerist, firms that use billable hours are not charging clients for outcomes, they're charging for time, regardless of what the client thinks they're paying for. As the billable hour continues to fade, naturally, so will its use as a measure of lawyer productivity.
Revenue Versus Value
In firms that have adopted fixed, or alternative, fee structures, one simple way to evaluate associate productivity is to measure their cost to business against the revenue they (help) generate. That's not too far off from the way it works for billable hours. In specialized, high volume practices where fixed fee rates are common, such as DUI defense, the number of cases an attorney handles in any given period of time should correlate to revenue and provide a firm with a good idea of that attorney's productivity.
However, outside high volume, fixed fee, or contingency fee, -based practices, without using the billable hour, it can be a little bit trickier to assess associate, or even your own, productivity.
Lawyer Output Units
In the traditional sense, productivity is measured by dividing an employee's output by their input. But, for attorneys on a billable hour, regardless of how the client sees it, the input and output are the same: time. An entry level attorney that inputs 2,000 billable hours in a year (assuming the hours are accepted), will output $400,000 worth of revenue/billable time to clients (assuming a $200/hour rate).
The problem with measuring productivity without the billable hour is that attorneys don't actually produce, or output, much work that clients actually value and want to pay for. Sure, drafting a solid contract is important, but clients value the end result of getting that contract in hand to use, and not the hours of research and writing that went into it. As such, as firm's move away from billable hours, law firm managers need to get creative when determining what factors to measure to assess productivity, and may even benefit from using surrogate measures.
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