How billable hours work in divorce proceedings

Lawyers, especially those who practice legal divorce proceedings, who bill for their time have been criticized for not providing fair value, being inefficient and over-billing. Sales of legal services are dropping. In thousands of court cases, such as legal divorce proceedings, clients are electing to not retain a lawyer and to represent themselves in court alone. Some clients are purchasing discrete blocks of lawyer time (aka unbundled legal services). Other clients are preferring non-lawyer solutions such as self-help tools, online legal options and non-lawyer service providers such as paralegals. The traditional billing model of fee for service, as measured by the billable hour, continues to be criticized as rewarding delay, inefficiency and unnecessary service.

Assessment Officers in the Superior Court of Justice are tasked with the legislative mandate to determine monies owed by clients to lawyers based on the billable hour. These Assessment Officers summarily discount lawyers’ accounts, thereby causing lawyers to write-off receivables and in some cases issue refunds. The unwritten policy of the Assessment Officers is to reduce accounts by at least 15%. Assessment Officers typically do not award costs to lawyers even when their accounts are upheld, despite being forced to suffer days away from the office and significant loss of income, simply to be paid for the time they devoted to the client.  All this devalues lawyers’ time, effort and skill.

Joining clients and Assessment Officers in devaluing lawyers’ time is the Ontario Court of Appeal.

In the decision of McCarthy Tétrault v. Guberman [2012] O.J. No. 4694, the appellate court swung the door open for clients wishing to assess (aka discount) their lawyer’s accounts.

The Court of Appeal stated:

“The right of a client to have a lawyer’s account assessed is an important one, not to be taken away except in compelling circumstances. As this court has stated, public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of a solicitor’s bill.”

Recently, the Court of Appeal publicized its views on the traditional billing model of fee for service, the billable hour. In Bank of Nova Scotia v. Diemer [2014] O.J. No. 5731, the appellate court stated:

“For many decades now, the cornerstone of legal accounts and law firms has been the billable hour. It ostensibly provides an objective measure for both clients and law firms. For the most part, it determines the quantum of fees. From an internal law firm perspective, the billable hour also measures productivity and is an important tool in assessing the performance of associates and partners alike. The billable hour traces its roots to the mid-20th century. In 1958, the American Bar Association’s Special Commission on the Economics of Law Practice published a study entitled “The 1958 Lawyer and his 1938 Dollar”. The study noted that lawyers’ incomes had not kept pace with those of other professionals and recommended improved recording of time spent and a target of 1,300 billable hours per year to boost lawyers’ profits: see Stuart L. Pardau, “Bill, Baby, Bill: How the Billable Hour Emerged as the Primary Method of Attorney Fee Generation and Why Early Reports of its Demise May be Greatly Exaggerated” (2013) 50 Idaho L. Rev. 1, at pp. 4-5. By 2002, in its Commission on Billable Hours, the ABA revised its proposed expectation to 2,300 hours docketed annually of which 1,900 would represent billable work: see Pardau, at p. 2. And that was in 2002. Typically, a lawyer’s record of billable hours is accompanied by dockets that record and detail the time spent on a matter. In theory, this allows for considerable transparency. However, docketing may become more of an art than a science, and the objective of transparency is sometimes elusive. This case illustrates the problem. Here, the lawyers provided dockets in blocks of time that provide little, if any, insight into the value provided by the time recorded. Moreover, each hour is divided into 10 six-minute segments, with six minutes being the minimum docket. So, for example, reading a one line e-mail could engender a 6 minute docket and associated fee. This segmenting of the hour to be docketed does not necessarily encourage accuracy or docketing parsimony.”  

Remember, the learned justices of the Ontario Court of Appeal had illustrious legal careers where they themselves charged their clients for their billable hour before their appointment to the highest court. Yet, the court effectively rejected the use of the billable hour.

How does the billable hour in divorce procedures work?

So what, if anything, is redeeming about the billable hour ?  

Lawyers are smart, educated and experienced in the law. Lawyers are problem solvers. Lawyers help clients achieve their goals and avoid problems. Lawyers help clients navigate through complex business and personal processes. Lawyers provide great value to clients. Mostly, however, the value is invisible. The intellectual effort exerted in legal matters such as legal research, drafting, negotiation, contemplation and trial preparation is not overt, tangible nor visible.  

Lawyers, like all service providers, sell their time. Clients purchase legal advice and representation because they require help. The buyer and seller of legal services require a parameter for the exchange of fee for service. The most obvious method to sell time is to fix an hourly rate by which to charge for time. For the reasons stated above, in the last few years, there has been plenty of literature on alternative billing methods. Flat fees, value-based billing, percentage-based compensation or combinations of these have been proposed. 

The complaints expressed over the billable hour have been premised on the idea that clients agree to only pay for legal solutions that are valuable.  However, in the vast majority of cases, the value and benefit of legal advice cannot be quantified. An accused who requires a defence in criminal court, a father who seeks custody of his daughter, parents who seek the return of their son apprehended by a CAS, victims of human rights violations, professionals facing disciplinary action and so many other legal matters have no dollar value. The legal work needed for the ones that do are not necessarily proportionate to the cost. This is especially the case when clients subjectively deem an issue of critical importance to them.

In all such cases, the fairest method for a lawyer to seek compensation for their work is by the billable hour. The problem however is not the billable hour nor the high cost of lawyers. The problem is the client’s perceived value. No client will trade their money for a service that they perceive to have a lesser value. The corollary is equally true. Clients will gladly pay for legal services that they perceive to have greater value than its cost. The challenge for the legal profession is not to defend or discard the billable hour, but to enlighten the client of the work performed. 

This has resulted in the springing of companies like Viewabill that claim that lawyer bills are a major cause for distrust in many professional relationships that bill by the hour, not knowing what has been done or what is owed until an invoice is received. A New York lawyer created the Viewabill software that sends clients updates, status reports and time estimates on a daily basis. Another company named LeGuard offers a software application that enables real time tracking of legal fees on computers or mobile devices. Their clients and lawyers can view and generate fee-tracking reports at any time. Rocker Matter is another online legal billing and law practice management software that runs on PC’s, Macs, iPhones and iPads using popular cloud applications like Dropbox and Evernote.

Tips to make clients see the value of the billable hour in divorce procedures

The book “Selling The Invisible” by Harry Beckwith stresses the importance of converting the billable hour into something tangible for the client. In my practice, I have adopted certain methods of informing (aka impressing) my clients of the work that I perform for them and its associated cost.

Here are my tips to you on managing clients’ expectations and improving their willingness to pay your fees for service:

1. I call my clients on weekends and evenings to ask questions about their case and share ideas, thus demonstrating the 24/7 nature of my intellectual work for them and investment in the outcome of their cases;
2. I send clients emails of the ideas and strategies that I am contemplating for their case and notifying them that I continue to consider more options to achieve their objectives;
3. I provide clients with rough drafts of letters, documents and pleadings that I have prepared before arriving at the final version;
4. I occasionally invite clients to sit in my office while I draft a letter, pleading, brief or factum so as to permit them to witness the thought and effort that is required of me;  
5. I sometimes print off case-law and ask clients to read them and be prepared to discuss their application to their cases;  
6. I send clients articles, cases and literature that I come across, that relate to their cases to demonstrate that I am thinking about them;  
7. I issue regular accounts to my clients so that they are well-versed in the work that I have done;
8. I offer clients the opportunity to be delegated a task on their cases to save money; clients rarely accept this invitation but then make the conscious decision to have me do the work;  
9. I ask clients for feedback on their experience of my work, often by email so that there is a record of their satisfaction; this evidence is useful when clients delay payment, make excuses to avoid payment or need to be presented at Assessments;  
10. Most importantly, I provide the very best customer service and client experience possible. 

The billable hour is not dead. The task of the lawyer is to better communicate to the client the demands of the work performed and the (non-monetary) value to the client. Satisfied clients pay their bills. Satisfaction is an experience that is within the control of the lawyer. 

So what experience are you creating for your client?

Steven Benmor, B.Sc., LL.B., LL.M. (Family) is Certified as a Specialist in Family Law by the Law Society of Upper Canada.  He can be reached at steve@benmor.com 

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