Bonuses for Hours Billed Highlights Divergent Interests Between Clients and Law Firms

This week brought the "big" news of announced associate bonuses at so-called "BigLaw" law firms.  With the bonuses at Cravath being the pacesetter.  8th and 9th year associates at firms like Cadwalader and Norton Rose Fulbright will get bonuses of $100,000 if they hit their billable hours target.  Allegedly, both firms require that associates must bill somewhere between 2000 and 2300 hours in order to be bonus eligible. Click here for more information on these bonuses.

It's hard to see how this kind of incentive is in the best interests of those paying the bills of law firms, the clients.  It's also a disservice to the professional development of these associates.  In the extreme, associates are being encouraged to pile on and pad their billable hours with no repercussion or understanding of what the client is actually willing to pay for.  We won't have to step too far out onto a limb to say that there is a strong chance the realization rates of many of these billers are probably low.  These types of incentives encourage the inefficiencies that clients continue to complain about when it comes to legal service delivery.  

It seems to us that a far better system is to reward associates for revenue collected at or above a certain target number so they can learn what a client is willing to pay for and what they are not.

Time is a poor measurement of value.