8 ms·

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was intere

• Traubenfuchs 4y ago
  He is clearly not very good with that billable hour craze. By doubling efficiancy you can sell the same hour to two customers. This is normal and encouraged in law and the consulting world.
  • Wowfunhappy 4y ago
    It is?! Couldn't this also be considered fraud?
    • rhino369 4y ago
      It's definitely not overtly encouraged in the legal field. You'd get disbarred if anyone found out about it. That said, there isn't much proactive looking for fraud.
  • gnicholas 4y ago
    In my time as a lawyer, I only knew one associate who bragged about overbilling. Not surprisingly, the child of a politician.
• Wowfunhappy 4y ago
  What was your advice on how to answer?
  • Traubenfuchs 4y ago
    „By doubling the efficiancy, you can use this to sell 16 billable hours per 8 hours of work.“
    • victor9000 4y ago
      Or you could double your client count and avoid committing fraud.
  • gnicholas 4y ago
    Fortunately I'm a former lawyer, so I anticipated the question. I told him to say that our tools will also help associates work longer hours with less visual fatigue. That means that they'll be able to generate more revenue overall, even if a given task takes less time. I never heard back after that conversation...lawyers aren't big on efficiency-enhancing technology. That tendency was probably one of the reasons I left biglaw!
• lotsofpulp 4y ago
  From the other side of the table, efficiency is encouraged when dollars are on the line too. A buyer is going to prefer a law firm that minimizes expenses. It is not like the law firm has a choice to keep using pen and paper to bill 100x the number of hours as others. They have to compete with other law firms.
  • lazide 4y ago
    That assumes buyers are able to properly price shop, and can discover a law firm that is more efficient. Much rarer than one would assume.
    • lotsofpulp 4y ago
      I do not know what “properly” price shop means, but I do not think law firms get blank checks. Buyers themselves are frequently lawyers so they are not completely out of the loop on what is and is not reasonable.
      • lazide 4y ago
        'Properly' price shop means that a client would be able to evaluate quality/price across a wide variety of firms in a transparent fashion relatively easily. Say with a week or two of work. That is impossible because the quality of work for a lawyer is very, very difficult to gauge, and it may take years (or decades) for bad work to be visible in many cases (say missing some bad edge cases in contract language, or they can't handle in litigation in certain types of cases, or the like). And other lawyers have little incentive to price shop either, as they usually get to add on a little on top when they farm out the work. Cost-plus, essentially. And if 'very expensive and opaque' is the norm, it's not like 'very expensive and opaque' is unreasonable.
  • rtkwe 4y ago
    It's an opaque field how's a client supposed to know this particular law firm is billing less hours than another would because they're using this software? Can't run the suit twice with two different firms blind to see which bills less hours.
• me_me_mu_mu 4y ago
  Low key hope in my life time I can see lawyers and other secretary tier professions disappear in favor of open source systems. The only time you’d need a lawyer will be in criminal court otherwise you don’t need to pay someone in six figure debt 800/hr to proof read something. Maybe I’m wrong but I would rather eat dirt than spend time/money on lawyers and other secretary tier professionals who ultimately still make mistakes.
  • resoluteteeth 4y ago
    Is software development also a secretary tier profession?
    • me_me_mu_mu 4y ago
      not as much as lawyers and accountants imo. they're a necessary relationship but its toxic. the systems in place for software are mostly open whereas the same cannot be said for a lot of legal and financial systems. they're not beginner friendly, and have a big barrier to entry from my experience.
      • TheNewsIsHere 4y ago
        Toxicity depends on the people involved. It’s kind of like medicine. There can be high stakes and you want someone who has “done it” before. Someone who knows the statutory law, the case law, the precedents, who keeps up on that area of expertise. It was tempting to buy a piece of software that could draw up the papers I needed to create my family trust, but if I really need that in 10 years and something is outdated or the laws have changed, then I’m just passing down a problem of unknown potential to my next of kin. I had recent need of an estate attorney when my mom passed unexpectedly, and the time, hassle, and general insanity the attorney saved my family and I was well worth the expense of a few grand coming out of the estate. He was very conservative in his billings and gave us four trips, in person, to government agencies on the house.
        • me_me_mu_mu 4y ago
• simmons 4y ago
  I've thought about this before. Some people will be likely to try to "milk the contract" by taking more time to deliver than is needed. Besides being necessary to deal honestly with one's clients, I strongly think it's in my self-interest to avoid such milking. Instead, I try to provide as much value as possible per hour, and if I can increase efficiency I'll be better able to negotiate higher rates at some point down the road. (Besides the fact that there's no shortage of software work, so it would be really hard to run out of things to do no matter how efficient you are.)
  • thomasahle 4y ago
    > if I can increase efficiency I'll be better able to negotiate higher rates at some point down the road. How does a client know whether a provider that charges double is also twice as efficient? I suppose it might work if you have a long relationship with said client, but if you are talking to a new client, it seems they'd just go with the lowest price per hour that seems reasonable.
    • simmons 4y ago
      > How does a client know whether a provider that charges double is also twice as efficient? I suppose it might work if you have a long relationship with said client, but if you are talking to a new client, it seems they'd just go with the lowest price per hour that seems reasonable. The same way that a client (or potential client) would know whether the existing rate is proper -- I (or my network references, word of mouth, etc.) must be able to sell them on the notion. If I can't sell it, then I might need to question whether that efficiency was really providing value to clients after all. I don't think people hire me because they're looking for the lowest bidder, so I'm not too concerned about that.
• jandrese 4y ago
  The fundamental problem with cost plus contracting in a nutshell.
• mdswanson 4y ago
  Never expect efficiency when their inventory is time.
• weq 4y ago
  I was in a lawtech startup and this is the EXTACT reason why i left and the reason why its hocky-stick never evolved. Sure they have customers, but they cant retain or grow. Lawyers get paid less the more efficent things are. Thats not a thing they desire, nore incentivize. Eventually they will come, kicking and screaming, but dont hold your breath.
  • majormajor 4y ago
    Are there lawyers who want to do more instead of doing the same amount less efficiently? Or are there other limiting factors of how much work they can take on like court schedules or such?
    • gnicholas 4y ago
      Some firms take fixed-fee work, but it is looked down upon at most top tier firms. When the economy tanks, all firms open up to these "alternative billing arrangements".
    • nonethewiser 4y ago
      Of course. There are a of small family owned firms. Some of these are sleazy and others have attorney's that really like to help people.
• gomox 4y ago
  This is actually an amazingly perfect example of the old B2B sales mantra "the buyer is not the user". I might steal it! How long have you been selling your software? If it's new-ish this honest question from the prospect can be life changing for your product positioning and marketing strategy.
  • gnicholas 4y ago
    Good point! We've been selling for several years, but legal isn't our only/primary market. We've made much more headway in the higher education market, since students have to read so much on screen (and don't have these perverse incentives related to billable hours!). But we actually run into the same buyer/not user problem on the licensing side of our business. Textbook publishers don't really care about the student's user experience, for example. This is because the textbooks are assigned by the professor, so students don't have a choice about which textbook to purchase. Fortunately, we're finally going to launch an integration with a digital textbook platform. Not surprisingly it's a reseller platform, not a publisher. Unlike publishers, their product differentiation is more about the UI, so they're looking to provide additional value by adding our reading enhancement tech. [1] 1: https://www.beelinereader.com https://www.beelinereader.com
    • gomox 4y ago
      So I was checking out your website and thought the product is actually deceivingly simple, but I couldn't find any mentions of actual reading speed improvements, other than the invitation to "take the challenge". What kind of speed improvement can I typically expect? Edit: I found the "research summary" link in the education page, but it doesn't appear to work in Chrome with uBlock for me. The actual "conventional" link in the FAQ does work. It might be because the former is not an <a href> but something else.
      • gnicholas 4y ago
        > What kind of speed improvement can I typically expect? For a typical skilled reader, up to about 25-30%. For people with reading challenges (dyslexia, ADHD, vision impairments), it could be much greater. One fellow with ADHD (and two PhDs) said that he could read about 3x the speed with BeeLine versus regular text. To get a sense of what the speed difference could be for you, check out our "Reading Challenge". [1] It's not super scientific (you might have more knowledge of one of the topics already, which would bias your results), but it can give you a ballpark figure. Thanks for pointing out the issue with the research summary link. I'll get that fixed ASAP! There's actually newer research that shows even larger gains for students with reading challenges, as well as data from companies (including a YC company) who saw dramatically lower churn rates and/or higher engagement for users reading with BeeLine in their apps. 1: https://www.beelinereader.com/challenge https://www.beelinereader.com/challenge
• bayareabadboy 4y ago
  This sounds fake. Every lawyer I’ve met is perennially overworked. Not saying it isn’t true, but it’s completely antithetical to my own experience.
• awsrocks 4y ago
• refurb 4y ago
  But how is this any different than a plumber who buys a new pipe camera and can scope a sewer line faster? Presumably this law firm may not like lower billable hours, but some upstart law firm might use it to bid lower and take their business.
• tyingq 4y ago
  Mechanics aren't shy about charging "hours" from a reference book that have little to do with how long the task actually took.
  • willcipriano 4y ago
    That's really just a guide for mechanics to figure out what to charge, it's a fixed fee deal with the estimated man hours on the invoice for reference purposes. You could call them work units or story points and arrive at the same number.
    • tyingq 4y ago
      The invoice, though, almost always says "hours x rate/hour = total labor".
• tacon 4y ago
  An old Mixergy episode from around 2009-10 was a legal software firm. They were having lots of sales resistance until the crisis hit, and a lot of large corporations moved their legal work in house to save money. That customer segment was product/market fit, and they thrived. Today we are entering a downturn, more legal work will move in house, and efficiency is rewarded. You can be assured that if that legal work eventually moves back to outside counsel, it will be very hard to bill more hours than the customer knows the work takes with modern tools.
  • gnicholas 4y ago
    Having worked as a lawyer from 2007 to 2014, I watched the legal landscape change during the Great Recession. Clients realized that firms were having partner-track associates bill thousands of hours on document review, when it could be done more cheaply/efficiently by contract lawyers (who billed at a fraction of the cost, and could be hired on a project basis). Clients pressed for fixed billing arrangements to save money, and law firms obliged because their books of business were shrinking. But then things came roaring back, and the purse strings loosened again. We may be in for another contraction, and if fixed-fee arrangements come back that would be a good thing for legal efficiency.
• deleted 4y ago
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• yesenadam 4y ago
  ...that kind of surveying which I could do with most satisfaction my employers do not want. They would prefer that I should do my work coarsely and not too well, ay, not well enough. When I observe that there are different ways of surveying, my employer commonly asks which will give him the most land, not which is most correct. I once invented a rule for measuring cord-wood, and tried to introduce it in Boston; but the measurer there told me that the sellers did not wish to have their wood measured correctly- that he was already too accurate for them, and therefore they commonly got their wood measured in Charlestown before crossing the bridge. - Henry David Thoreau, from Life Without Principle, 1863 https://xroads.virginia.edu/~Hyper2/thoreau/life.html https://xroads.virginia.edu/~Hyper2/thoreau/life.html
• matheusmoreira 4y ago
  > using your software is going to cause the billable volume to go down Yeah, that's a huge concern. If they get paid for literal hours, then they're directly incentivized to maximize hours. Software is highly effective when you get paid for productivity: hourly rate scales with efficiency. I want to reduce the hours I spend working so I can go back to enjoying my life as soon as possible. I wrote my own software to track my process and compute statistics so I could identify bottlenecks and opportunities. Essentially a profile-guided optimization run on my job which doubled my hourly rate and got me home faster.