This is a question that I am often asked. Why is it that I have received a bill from my lawyer and they have charged me time in blocks of 6 minutes and where I have spent say 6 and a half minutes on the phone with the lawyer why does that cost me twice as much as if I had spent 6 minutes on the phone with them. This is a frustration for many business owners when they are dealing with a lawyer as they don’t know why lawyers charge the way that they charge.
The short answer is that it is based on a misunderstanding of a series of papers written for the American Bar Association Journal from 1940. As quoted in Implementing Value Pricing by Ronald J. Baker, the author of these papers was Reginald Heber Smith who was a managing partner at a Boston law firm. At the time Mr Smith was looking for a way to account for and manage the cost of the inventory of his business. In this case Mr Smith saw time as the commodity that the business of law was producing.
To do this Mr Smith argued that the time sheet should be kept in periods of 1/10th of an hour, therefore 6 minutes to enable tracking and monitoring of the commodity of time. Therefore, Mr Smith advocated that lawyers should keep time sheets to prove this efficiency. He did not advocate that the lawyer should use this to charge their clients. Unfortunately this paper and this approach has since 1940 become more and more the way that lawyers charge for the work they perform.
If your lawyer is charging you based on the time they spend on your matter you should challenge them to provide a fixed fee quote to give you certainty on the price that you are going to be charged moving forward.
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