Trylon Communications  - Volume I Issue 4
       

The Billable Hours Myth

Do you ever wonder if you are getting what you pay for?  A recent article in the New York Times detailed the problems in the legal industry that track back to the concept of billable hours.  The same case can be made for the PR industry as well.

When you hire a firm that specializes in one area, are you paying for their time or for their expertise?  That should be your biggest question.  One way to answer that question is by taking a look at how they are compensated.

It is inconsistent, even somewhat ridiculous, to offer to pay a person extra to take longer to get something done, but with the billable hours system, that is just what you are doing.  Some of the examples brought to light in the Times article included lawyers billing clients for attending hearings in which they were simply observers, and lawyers fudging their time sheets to add hours to clients’ accounts.

Requiring new associates to bill tons of hours is nothing new.  Any reader of a John Grisham novel will understand that it is common practice.  However, just because everyone does it, is it the right thing to do?  If someone has to do something several times before they get it right, should the client pay the price?

Persuasion is an art.  Lawyers use knowledge and skill to persuade juries and judges to see their clients’ point of view.  PR firms use knowledge, contacts and skill to persuade the court of public opinion regarding their clients.  In both cases, the outcome of the event should have some determination upon the fees paid by the client.

Perhaps most disconcerting is the fact that under a billable hour system, incompetence is actually rewarded.  When a PR firm can talk to one reporter at the Wall Street Journal and get a story published, shouldn’t they receive a higher paycheck than the company that spent two weeks unsuccessfully pitching the same story to dozens of reporters all over the country?

It is antithetical to believe that technology companies, who operate under Moore's law of continually increasing speed, should be represented by companies who are compensated more for moving slower.  

The end of the article sums it up when one attorney was quoted as saying that the billable hours system was forcing the ethical attorneys out of the practice.  The solution is to move the model of law firms, and most PR firms, to strictly results-based retainer fees.  After all, delivering realistic results allows for a relationship based on true sustained expert consultation, not merely burning through hours.