The Business Innovation Insider: The death of the billable hour

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August 23, 2006

The death of the billable hour

Christopher Marston.jpg David Maister links to an article he wrote about an innovative law firm started by Christopher Marston, a 29-year-old lawyer who is attempting to do away entirely with the notion of "billable hours" within the legal profession. Instead, his law firm has introduced "fixed price" billing for its clients. That's not all -- Exemplar Law Partners is actively hiring "non-lawyer" lawyers; offering clients a "satisfaction guarantee"; and promoting a "No Grinch" style of legal teamwork. Within the legal profession, of course, doing away with the notion of the billable hour and replacing it with a system of fixed price billing is about as disruptive as it gets. Below, David Maister explains Marston's motivation for starting a radically different type of law firm:

"Straight out of law school, [founder Christopher Marston] spent six months developing a business plan for a new kind of law firm. As he tells it: “What began as intellectual curiosity became in-depth research, which turned into a business plan.” Like most of his classmates, Marston was not encouraged by what he had heard about the life of a typical lawyer in a typical law firm, and even though he had won many awards at law school, he wasn’t tempted to join a traditional firm. “Lawyers are slaves to the billable hour,” he notes. “By measuring and rewarding billable hours, internally and externally, lawyers are actually punished for innovation — greater efficiency just reduces the bill to the client.” Accordingly, using every penny of savings he had accumulated from his previous activities, Marston launched Exemplar Law Partners, opening the doors to clients in January 2006."

For real-time commentary on the law firm of the future, check out Chris Marston's blog on Blogspot. Also, David Maister's article (originally published in the Summer 2006 issue of InnovAction) has extensive commentary on the business model of Exemplar Law Partners, as well as insights into the role of innovation within the legal industry.

Tags: law lawyer Exemplar innovation billable hour

[image: Christopher Marston]

Posted by dominic at August 23, 2006 11:58 AM | Recommend this! | +dlc | +dig

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Comments

Financing and repackaging are two amazingly effective yet simple ways to innovate. This is a great story!

Posted by: Chris Harris | August 24, 2006 3:12 AM

Another way law firms can innovate is by paying attention to their capitalization. Many small to medium size law firms are constrained from growing by a lack of capital. That doesn't have to be the case. At our firm, Stillwater Capital in New York, we have a specialty lending to the legal industry. We have a fund that lends money to small and medium sized law firms and the loans are collateralized by a secured interest in the firms fee income. The fund underwrites the loans by carefully analyzing many of the borrower's major cases and lends only a
portion of the prospective income. The program has been highly successful.

Richard Rudy, Stillwater Capital

Posted by: Richard Rudy, Stillwater Capital | August 29, 2006 5:43 PM

An ox is taken by the horns, and a man by the tongue... Rawsone

Posted by: Rawsone | November 21, 2006 1:55 PM

The tongue of idle persons is never idle... Jennette

Posted by: Jennette | November 21, 2006 2:06 PM

Don't trouble trouble until trouble troubles you... Arnold

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