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The billable hour is a trap into which more and more of us are falling

timharford.com

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Re: The billable hour is a trap into which more and more of us are falling

#41

Post by rtkwe »

lotsofpulp wrote: post #33
gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

From the other side of the table, efficiency is encouraged when dollars are on the line too. A buyer is going to prefer a law firm that minimizes expenses. It is not like the law firm has a choice to keep using pen and paper to bill 100x the number of hours as others. They have to compete with other law firms.

It's an opaque field how's a client supposed to know this particular law firm is billing less hours than another would because they're using this software? Can't run the suit twice with two different firms blind to see which bills less hours.

Re: The billable hour is a trap into which more and more of us are falling

#42

Post by egypturnash »

MrRiddle wrote: post #14
radoomi wrote: post #7

Earlier quoted context omitted.

Exactly in the same spot, I've recently gone freelance where I'm paid by the hour and I've yet to take a holiday cause I always think this week of holiday will cost me $$$ (huge amount of money compared to what a normal one week holiday would cost). Sadly, I will probably burnout soon and ignore that thought.

I took this list to gauge how many hours I want to work per year, and decided that 1500-1600 hours is enough, if it’s not, then the rate should be higher. https://en.m.wikipedia.org/wiki/List_of_countries_by_average...

Damn thats a nice list. Today I learnt that despite living in the USA, I have managed to arrange my life so as to work about as much as the average German.

Re: The billable hour is a trap into which more and more of us are falling

#43

Post by ascar »

lotsofpulp wrote: post #33
gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

From the other side of the table, efficiency is encouraged when dollars are on the line too. A buyer is going to prefer a law firm that minimizes expenses. It is not like the law firm has a choice to keep using pen and paper to bill 100x the number of hours as others. They have to compete with other law firms.

I don't think that works here. When getting a lawyer you are more interested in outcomes than price and we are probably not talking 100x but more like low to mid double digit percent. Important enough for the lawfirm in control of their price, but nothing the clients can really select for, especially since he is at a information disadvantage.

Re: The billable hour is a trap into which more and more of us are falling

#44

Post by me_me_mu_mu »

gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

Low key hope in my life time I can see lawyers and other secretary tier professions disappear in favor of open source systems. The only time you’d need a lawyer will be in criminal court otherwise you don’t need to pay someone in six figure debt 800/hr to proof read something.

Maybe I’m wrong but I would rather eat dirt than spend time/money on lawyers and other secretary tier professionals who ultimately still make mistakes.

Re: The billable hour is a trap into which more and more of us are falling

#45

Post by Kaze404 »

gsibble wrote: post #6

I've been paid high hourly wages to build software and you definitely start to look at every minute of non-billable time as, "I could have made X in these 3 hours I spent relaxing." Leads to overwork. There's a healthy balance but took me a while to find it.

This is an interesting anecdote, which I can relate in a tangential way. I'm a huge fan of MMOs, and part of that fun is grinding for more wealth. Some of the games I played over the years at some point became infested with Real Money Trade (tl;dr people would buy and sell in-game currency with real life money), and over time such activities would make me quit the game because it framed everything in real money. Sure, I could play the game for 5 hours like I did before and make $5 USD in in-game currency, or I could do some freelance work and make 200x that.

Re: The billable hour is a trap into which more and more of us are falling

#46

Post by simmons »

gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

I've thought about this before. Some people will be likely to try to "milk the contract" by taking more time to deliver than is needed. Besides being necessary to deal honestly with one's clients, I strongly think it's in my self-interest to avoid such milking. Instead, I try to provide as much value as possible per hour, and if I can increase efficiency I'll be better able to negotiate higher rates at some point down the road.

(Besides the fact that there's no shortage of software work, so it would be really hard to run out of things to do no matter how efficient you are.)

Re: The billable hour is a trap into which more and more of us are falling

#47

Post by Spooky23 »

tomatowurst wrote: post #13

Does anybody make $1000 USD / hr? What is your day to day like? How many clients do you have and how many hours do you bill per year? Do you actually work 2087 hours per year which would net you $2MM/year? I'm curious how some people are able to bill such high amounts and how they got started. It must also be extra stressful since its not like you are working for a company either so you need to do marketing and find…

I know a attorney/lobbyist who make pretty close to that. They spend a lot of time on the phone, doing emails, etc. The key thing is they know their shit and and pick up the phone and get people when needed.

Almost nobody is producing work output on an hourly basis worth more than $200/hr. You’re paying for what and who they know, together. The good ones are worth it.

Re: The billable hour is a trap into which more and more of us are falling

#48

Post by cogman10 »

lotsofpulp wrote: post #33
gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

From the other side of the table, efficiency is encouraged when dollars are on the line too. A buyer is going to prefer a law firm that minimizes expenses. It is not like the law firm has a choice to keep using pen and paper to bill 100x the number of hours as others. They have to compete with other law firms.

It's, frankly, pretty easy for a law firm to pump up their billable hours.

"Document review" is something law firms can dump thousands of manhours into with no real appreciable change in outcome. It ends up being more a question of what a company/individual is willing to pay.

The reason big lawfirms stay in business isn't because they generally get much better results, but rather it's because they have the time and manpower to chase down every single rabbit hole to fully understand the law around the cases they are working. So, instead of a firm giving you a "We are 95% sure the law is this way" with a bigger firm you get "We are 99% sure the law is this way."

The other messed up part of the US legal system is the bigger the law firm, the more time they have to chase down discovery rabbit holes looking for wins and (potentially) legally bankrupting their opponents. "Document A references document B written by Foo? Well, lets have a deposition of Foo and a request for Document B". It ends up looking a lot like refactoring spaghetti code in a dynamically typed language.

Re: The billable hour is a trap into which more and more of us are falling

#49

Post by ricardonunez »

magicink81 wrote: post #21

Jonathan Stark is a thought leader / coach / writer / blogger etc that has been beating the drum on time-based pricing vs value-based pricing. He helps software engineers and others get off the time-based model and transition to value-based. Here's his website: https://jonathanstark.com/ Here are some interviews where he covers the topic https://www.youtube.com/watch?v=UT32G9wmONg https://www.youtube.com/watch?v=B1b7…

Thanks to Jonathan Stark book and podcast I stopped doing billable hours and go with flat fees and flat monthly and my income sky rocketed. I just offer more for my consulting services for a flat fee and customers seems to love it. I always over deliver and was frustrated with crappy time tracking and having to justify it.

Re: The billable hour is a trap into which more and more of us are falling

#50

Post by jandrese »

gnicholas wrote: post #27

Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for the…

The fundamental problem with cost plus contracting in a nutshell.
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