The subject today is not the economy. First, because I have nothing new to say, having vented in the last few blogs, and second, because the news on this subject is generally positive so any contribution I make would just add another voice to a growing chorus of positive thinkers. The subject today is not the economy. First, because I have nothing new to say, having vented in the last few blogs, and second, because the news on this subject is generally positive so any contribution I make would just add another voice to a growing chorus of positive thinkers.
Today the subject is litigation, brought on by the confluence of two communications received Monday morning. The first was a news item in the Wall Street Journal (August 23, 2009) headlined 'Billable Hour'Under Attack. In essence, the contributing journalists, Nathan Koppel and Ashby Jones, explain that a nascent movement is underway, led by major U.S. corporations, to request that their outside law firms switch from the traditional practice of billable hours to a flat fee arrangement, which is said to be a way to reduce the outside legal expenses of these corporations.
I think many of us became aware of billable hours from television shows like Boston Legal, most recently, and its predecessors. In case you don't know the term, it means that law firms staffed with highly paid junior lawyers must increase their billable hours to afford them as employees. The recent recession and its impact on corporations was the cause for a review of outside legal fees as a way to keep the bottom line in order, and incidentally to act as a catalyst for a paradigm change in the way they are billed. Young lawyers like the salaries but hate the hours, 12 a day was not uncommon, that's a lot of billable hours.
I'm sort of on the fence on this one. On one hand I think a legacy policy is due a change, on the other I enjoyed the practice on occasions when I was involved as an expert witness, charging my time, as the lawyers did, on billable hours. I have also done flat fee work but this was usually for background research assignments. When courtroom appearances were involved I usually went the billable hours route, because predicting a flat fee in this circumstance is difficult with so much beyond your control.
The second litigation communication was a notice that a class action lawsuit in which I am a class member, revolving around tax recovery charges, has been settled and it's now time to decide how to participate in the settlement. I have been involved in a reasonable number of class actions, ranging from auto lease overcharges to foreign transaction fees. Many of these, based on the possible settlements, were hardly worth the effort to participate but some I chose settled and I received cash awards or equivalents. One or two were modest in size and welcome.
The problem with these suits is that the law firms handling the class action make the big bucks, leaving a smaller pie for divvying up for us participants. Remember, at these law firms billable hours is the name of the game.
Anyway my position on class action suits (including those that appear in the Sunday newspaper supplements) is to read what the settlement will be and if it is for cash, join the suit, if for goods or payment 'in-kind' (discounts of air travel with all kinds of blackouts) ignore it.
Since I generally see (except for those newspaper notifies) only class actions that mostly affect me as a traveler, I can only imagine how many of these actions are underway as this is being written. Must be keeping legions of young lawyers busy building up those billable hours.
Will the shift to a flat fee focus change the number of the class actions that appear? Doubt it.