Enron and SOX encourage hourly billing

A managing partner, speaking on a recent panel, responded to a question about the prevalence of hourly billing. He said that his firm, with hundreds of lawyers, represented only a small number of clients on matters governed by alternative billing, but he then gave that tired horse about hourly billing a giddy-up.

“In the aftermath of all the corporate financial and governance scandals, company managers and lawyers are even more reluctant to limit law firms. If a firm recommends that something be looked at or thought about, given the recent parade of CEOs to prison, no one wants to rein in the firm. Their looking or thinking is best done on hourly rates, or there is a latent concern that firms on a fixed fee will not do something that a later investigation will find should have been done.”

Makes some sense, perhaps. But I still rebel from the notion that it makes business sense to encourage a policy of leave-no-stone unbilled. That’s abdication of in-house counsel’s responsibility of stewardship.

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