Billable Hours

Before the economy completely imploded, I was working on a project at a big firm, the associates for which told us that they liked the client (who has since filed for bankruptcy) and because of that, had responded to their request for a reduction in billing by cutting their bills in half.

Because of the economic crisis, clients are telling law firms that billable hours only encourages them to prolong the agony; while that may be true, it's likely true of any industry that does consulting, be it legal, HR or accounting. I would expect that though law firms are in the news because of this, that it's also true that other types of firms are being asked to change their billing structure.

The problem that I see with this is that you can't really charge a flat fee for these sorts of work; for one, you don't know how many hours are needed, whether others (like document review attorneys) are being brought into the mix or how complicated the project really is. And, if you haven't thought of this on your own, people misrepresent things. Until you're actually in the midst of the project, there's no way to know what it will be. I think billable hours are just fine to begin with, but it makes more sense to me that you might provide a reduced rate.