One influential legal commentator called it the legal profession’s “not so hidden shame.” An American Bar Association president called it the intersection of “many of the profession’s contemporary woes.” And the ABA’s Committee on Legal Ethics and Professional Responsibility termed it a “major contributory factor to the discouraging public opinion of the legal profession.” The “it” they all are referring to is lawyer billing and in particular, hourly billing. How is it that something initially so well received by lawyers and clients alike is now almost universally reviled by lawyers and clients alike?
Lawyer billing by the hour had a benign enough beginning. Although some form of hourly billing was thought to have been around since the Middle Ages, hourly billing did not become of age in the legal profession until the 1950’s. It was brought about by improved law firm accounting practices that allowed attorneys to better determine not only whether their fees charged were sufficient to cover overhead and generate suitable profits. 
Reflecting a time when the practice of law was less of a business than it is today, determining profit targets was a relatively simple task in the 1950’s. Experts advised lawyers to determine their hourly fee by setting a target annual amount they wanted to earn for the year and after adding in overhead, dividing that by the number of hours they expected to work. As one expert in 1959 advised lawyers, “If you want to take home $14,000 a year and your overhead is $6,000, you have to average $16.67 an hour for the 1,200 hours a year that you expect to bill a client.”
Hourly billing was also welcomed by clients – particularly large clients who welcomed the perceived greater accountability that hourly billing provided. In fact, some believe that it was the larger business clients who actually pushed lawyers to adopt hourly billing practices. According to one authoritative commentator,
“The evolution from one line bills ‘for professional services’ to billing on the basis of precise calculation of time began when clients, particularly those with in-house counsel, as well as insurance companies that hire lawyers to represent insureds, looked for greater accountability and precision in the way they were charged for lawyer services.”
Hourly billing also helped lawyers address a large problem they were facing at the mid-point of the last century. Various studies in the 1950’s and into the 1960’s indicated that attorney compensation was failing to keep pace with inflation and was lagging behind that of other professionals, particularly physicians. Law firm consultants advised that those lawyers who kept accurate time records and billed by the hour made more money.
Following the advice of experts at the time, many attorneys not only began to keep time records and bill clients by the hour, but they also raised their hourly rates. As competition among lawyers increased and the economy fluctuated, though, many lawyers found that they could not increase their rates enough to cover increased expenses. The only option open to those lawyers was to increase their number of billable hours.
In the 1950’s, simply working more hours was not particularly challenging. At that time, hourly billing targets for most lawyers were in the 1,200 to 1,500 hour range. On a 48 work week basis, this amounted to about 25 to 30 billable hours per week. This range left most lawyers with ample time for other professional activities such as pro bono work and for civic activities that lawyers were generally known for in their communities.
From the 1960’s, hourly billing targets began to change. An ABA study in 1965 found that hourly billings for attorneys ranged from 1,400 to 1,600 for associates and 1200 to 1400 for partners. In the 1980’s, billable hour target at many firms rose to an average 1,800. From there, billing hours kept climbing upward to today where 2,000 to 2,200 billable hours is the norm in many law firms. But in other law firms, the minimum annual billing target for associates is a staggering 2,400 to 2,500 hours!
With the changes in hourly billing targets over the years, law firm attitudes toward hourly billing begin to change. What began benignly as hourly billing “targets” soon became aspiration hourly billing “goals” and then became crushing hourly billing “requirements.”
Looking from the outside in, it may not seem to be too onerous for lawyers to work the hours necessary to bill 2000 hours a year as this would calculate to 40 hours per week for 50 weeks leaving two weeks left over for personal time. However, other factors also must be considered such as holidays and illnesses which require time off. And, very few lawyers (like anyone else) actually work eight hours straight each day without taking breaks, experiencing interruptions, or spending non-billable time with staff or colleagues on all manner of non file matters.
It has been estimated that it really takes three hour in the office for every two that are billable.  This would mean that to actually generate 2000 hours of billable time, a lawyer must spend 3000 hours in the office. For those lawyers who also take time off for vacation, holidays, and illnesses, this works out to 12 hour work days. Of course for attorneys who have to meet higher annual minimum billing requirements, any time off is almost impossible for all practical purposes. Also practically impossible under higher minimum billable hour requirements is time for other professional activities such as pro bono or civic work.
The seriousness of the personal and professional problems to lawyers brought about by hourly billing was the subject of a 2002 American Bar Association Commission on Billable Hours. The Commission expressed concern about the “corrosive impact” of hourly billing and stated that it:
- Penalizes the efficient and productive lawyer
- Fails to discourage excessive layering and duplication of effort
- Puts the client’s interest in conflict with the lawyer’s
- Client runs the risk of paying for . . . padding of timesheets.
Recognizing all of the challenges to lawyers of meeting high minimum annual billing requirements, the ABA Commission on Billable Hours recommended that firms set annual billing hourly requirements of no more than 1,900 hours.
The ABA Commission’s referenced concern about “padding of timesheets” is a well-founded concern as many attorneys who bill by the hour have turned to engaging in deceptive billing practices. This is borne out by surveys of attorneys who admit that they or members of their firms routinely engage in some deception in their billing practices.
Even the ABA Commission on Billable Hours found that high billing hour requirements puts subtle pressure on attorneys to bill up, i.e., be aggressive rather than conservative in recording time. The Commission’s comments reflected similar comments made earlier by Chief Justice William Rehnquist that if lawyers were expected to bill more than two thousand hours per year, “there are bound to be temptations to exaggerate the hours actually put in.”
Be it called “time padding” or “aggressive recording of time,” many legal scholars believe that the most corrosive impact of all hourly billing issues extends beyond the direct dollar issues. Many legal scholars are worried that lawyers who routinely cheat clients on their legal bills may become so synthesized to cheating that lying to the client becomes routine and relatively easy to do in other aspects of the relationship.
As there are so many problems now seemingly inherent with hourly billing not only for the lawyer, but also for clients, a good question is why continue with it? Alternative billing methods are available. The simple answer is that there are problems with other forms of attorney billing methods. For example, with regard to “flat fee” billing, many clients think that it encourages attorneys to do as little work as possible while many lawyers think that it encourages clients to ask that too much be done.  Perhaps one commentator put it best from the clients’ perspective when he observed, “unethical lawyers will have problems no matter what kind of billing system is used.”
The bottom line is that with all of its problems and challenges, hourly billing is still considered to be the best method of determining lawyer accountability. And hourly billing is still preferred by clients over other forms of billing especially for certain types of legal work such as litigation.
 See Alan G. Greer, Billing, Our Profession’s Not So Hidden Shame¸13 ABA Prof. Law. 19 (Winter, 2002).
 See Robert E. Hirshon, Preface, ABA Comm. on Billable Hours Report (August 2002) at ix (“It has become increasingly clear that many of the legal profession’s contemporary woes intersect at the billable hour.”).
 See ABA Comm. on Ethics and Prof. Responsibility Formal Op. 93-376 (1993), Billing for Professional Fees, Disbursements, and Other Expenses.
 See The History of Hour Billing, ABA Comm. on Billable Hours Report, supra, at 3.
 See William G. Ross, The Honest Hour: The Ethics of Time-Based Billing by Attorneys, 16 (Carolina Academic Press 1996).
 Id. fn. 64 (citing Haberman, Twelve Steps to Prosperity, DICTA (Denver Bar Assoc.) at p. 509 (Nov. – Dec. 1959).
 See Lawrence J. Fox, End Billable Hour Goals . . . Now!, 17 ABA Prof. Law. 3 (2006).
 See William G. Ross, supra at 16.
 See The History of Hourly Billing, supra note 3.
 See William G. Ross, supra note 5 at 19.
 See William G. Ross, supra at. 20, citing Sloat and Fitzgerald, Administrative and Financial Management in a Law Firm (ABA Standing Comm. on Economics of Law Practice, Pamphlet 10, 1965).
 See Lisa G. Lerman, Lying to Clients, 138 U. Pa. L. Rev. 659 (1990).
 See Arwin Greenwood, Going, Going, Gone, ABA Journal (November 2008) at 23 (citing 2,400 monthly minimums at some law firms); Gerald F. Phillips, It’s Not Hour Billing, but How It’s Abused that Causes the Poor Image of Attorneys, 18 ABA Prof. Law 21, 23 (2007) (“It would appear that the trend for higher salaries for associates will continue and that firms will require a minimum of 2400 billable hours to offset the continually rising wages for associates.); Higher Associate Pay Scales Often Tied toBillable Hours¸Chicago Law Bulletin, March 2, 2000 (citing that associates required in some cases to bill 2,300 to 2,400 hours to achieve highest salaries).
 See Gerald F. Phillips, The Rules of Prof. Conduct Should Provide Guidance to Attorneys with Respect to Billing Clients, 15 ABA Prof. Law 1 (Spring 2004) (“[T]he general rule of thumb for billing hours is that a lawyer must spend three hours in the office for every two that are billable.”).
 See Arwin Garwood, supra note 13.
 See The History of Hour Billing, ABA Comm. on Billable Hours Report, supra note 1.
 Id.at 5.
 See Model Law Firm Policy, ABA Comm. on Billable Hours Report, supra note 1 at 50-51.
 See Lawrence J. Fox, supra note 12 at 8 (“[T]here have been far too many documented cases of billable hour abuse.”); Andre Gharakhanian and Yvonne Krywyj, The Gunerson Effect and Billable Mania; Trends in Overbilling and the Effect of New Wages, 14 Geo. J. Legal Ethics 1001, 1004 (Summer, 2001) (“Overbilling is a serious problem in the legal community.”); Gerald Phillips, Time Bandits, 24 Los Angeles Lawyer 24 (March 2001)(“Unfortunately, it must be recognized that billing abuses are widespread.”); Lisa Lerman, Blue-Chip Bilking: Regulation of Billing and Expense Fraud by Lawyers, 12 Geo. J. Legal Ethics 205, 227 (Winter, 1999) (“Research suggests that there is a substantial amount of billing and expense fraud.”); Lee Watson, Communication, Honest, and Contract: Three Buzzwords for Maintaining Ethical Hourly Billing, 11 Geo. J. Legal Ethics 189 (Winter, 1998) (“There seems to be a general consensus among American that all attorneys generally over bill their clients.”); Douglas Richmond, Prof. Responsibility and the Bottom Line: The Ethics of Billing, 20 S. Ill. U. L. J. 261, 263 (Winter, 1996) (“Fraudulent or deceptive billing is a disturbingly common problem.”); also see William G. Ross, Attorney Billing Surveys, http://www.williamgeorgeross.com/surveys.html.
 ABA Commission on Billable Hours Report, Current State of the Profession, supra note 1at 5-7.
 See William H. Rehnquist, Dedicatory Address: The Legal Profession¸62 Ind. L. J. 151, 155 (1987).
 See Adam Altman, To Bill or not to Bill . . ., 11 Geo. J. Legal Ethics 203, 211 (Winter, 1998) (“Once he becomes even slightly comfortable with charging the client for superfluous time, a question is begged: why strain in the service of the client . . . when inefficiency has its own rewards?”); Lisa Lerman, Lying to Clients, 138 U. Pa. L. Rev. 659, 680 (January 1990) (“If one accepts the use of small deceptions in one setting, it becomes easier to use deception . . . in other settings”).
 See ABA Commission on Billable Hours Report, Alternative Billing Methods, note 11, at 13.
 See Douglas R. Richmond, In Defense of the Billable Hour, 14 ABA Prof. Law 2, 4 (Winter 2003) (“so-called flat fees have their own problems. . . . Flat fees encourage attorneys to do as little work as possible.”).
 David Waxse, Comments and Alternatives to Hourly Billing, 68 Kan. B. A. 1 (1999).
 See Lisa Lerman, supra note 16 at 720 (“[H]ourly billing offers a greater degree of potential accountability than other methods of billing.”).
 See Douglas R. Richmond, supra note 24 at 4 (“Most clients reject the concept of ‘value billing’ and similar alternative fee arrangements.”).