Breaking the Law-Time Continuum

Albert Einstein helped us to see that space-time is one integrated system, and the legal world also has made it clear that law and time are a never-ending, intertwined continuum. From your professional career rank, to your pay, to how clients measure value, law and time operate in unison as if forged together by the indomitable forces of nature.

Here are a few examples.

Job = Time + Law

After qualifying, Jake has worked at law firm X for four years. Carrie has worked at the same firm for three years. Jake not only gets paid more than Carrie because of this extra 12 months, but he is charged out to the clients at a higher rate. But why?

A document proofed by Jake is therefore (so the law-time logic goes) more valuable to the client than a document proofed by Carrie – as they will end up paying more for it. (And if it’s not more valuable, then why does the client agree to pay the firm more based on the seniority of the associates that do the work?)

Is Jake a better lawyer? Is Jake creating more value than Carrie as he sits at home in front of his laptop checking the pagination is correct on a 100-page contract the firm is completing for a client?

Equally, is Carrie a worse lawyer? Is she really less valuable because she has not yet had the extra 12 months of doing relatively process-level work? Maybe she works faster? Maybe she is actually more attentive to detail than Jake, who has a great memory for statute law but is often a bit sloppy when it comes to accuracy.

In fact, why do junior lawyers do all the process work? Why not get the senior lawyers who fancy a break from advisory input to do some of the pagination?

And likewise, why cannot a younger lawyer be brought into the brainstorming session with the client to help formulate a negotiation strategy? Maybe a fresh mind will add value here? But, no. This high value meeting will only be taking input from very senior associates and partners. Why? Because obviously (according to law-time logic) a lawyer aged 25 and with post qualification experience (PQE) that you can count on one hand, could not possibly add value to anything other than process work.

And so it goes. Although it’s worth adding that of course lawyers with a lot more experience generally have more to offer than a very junior lawyer, it’s just the way the time-based metrics here are so intransigently applied and don’t allow for creativity, or lead to assessments of value that cannot correspond with the real world, e.g. that process work by a PQE 4 lawyer is actually, visibly, tangibly, more valuable than the same process work done by a PQE 3 lawyer.

Measuring Value

And of course there is the blessed billable hour, which is also deeply part of law-time logic. Here’s a little scenario.

A large commercial law firm explains that clients pay for two things: the process work of the associates (which is billed out in hours) and is a substantial part of the total bill, plus the input of the partners (and the firm’s proprietary knowledge), which is a far smaller part of the bill (even if charged out at a far higher rate, and it’s also on the hour).

So the client is basically paying for the process work? (As that makes up the majority of the bill?)

No, replies the firm, they’re paying for the expertise of the partners and our institutional knowledge, as that is where the real value is.

OK, so why not just pay for the time of the partners if they’re the ones creating the value?

We can’t just charge out the partners because they are also valued via the hour, so if we only charged for the partners’ time we’d make very little money.

So you’re billing for a lot of lower value work as the partners’ input is tied to the hour as well and that alone won’t make enough money for the firm? I.e. the junior lawyers’ work is really just paying for the partners’ input and the firm’s institutional knowledge?

Exactly. The real value is from the know-how the firm brings to the client, but we create the bill based on the associates accumulating lots of billable time. You see, one pays for the other.

Got it. So, why not just charge very little for the associates’ input and then charge the bulk of the fee based on the knowledge and insight of the partners (who presumably have become co-owners of the firm on the basis they really know what they are doing when it comes to legal advice)?

E.g. if the bill is $100,000, you charge $90,000 for the input of the partner involved even if they only contributed 9 hours of actual work, and $10,000 for the team of four associates, which did many hours?

Can’t do that, as that would mean the partner was charging $10,000 an hour. The client would never accept it. (And our financial model is predicated on the idea that associates create the majority of time-based billings.)

But in this case the firm’s institutional knowledge and the partner’s input is way more valuable than anything else. If you want $100,000 for that work, why not just ask for it? Why the complicated song and dance about the associates creating value from all those billable hours?

In fact, why not just charge a fixed fee of $100,000 and be done with it? The client is smart, they’ll appreciate what you have done, they don’t need to see a load of time sheets to appreciate the subtle brilliance of the way your firm has worded this contract…..surely?

Ah…..well….you see….er….in fact it’s the client that keeps on asking us to bill them by the hour. They tell us it helps them to understand the value of our work.

And so it goes.

I.e. the marriage with time is so embedded that even when the client must know they are not really paying for time, they still pay for it. The time that is billed is basically a proxy for the value the firm delivers, which is not related to time at all. There really is something absurd there. Yet, here we are.

Technology’s Achilles’ Heel

In such a world how do you use tech to really make a difference? If you are clocking up process time to indirectly pay for the value the firm as a whole delivers to the client, i.e. billable time as a proxy for value, then what room is there for tech that drives efficiency?

We all know the answer is: very little, or only where that work is so low value, or so hard to bill, or so likely to be written off, that the use of tech makes sense. Because if you can’t make money from time, then you need to get through that thing as fast as you can (in the law-time continuum).

Conclusion

We could also throw into the mix the time needed to study, and the often time-based hoops one has to pass through before becoming a lawyer (e.g. in England & Wales you have to show you have two years of appropriate work experience – but why two years, why not six weeks? Or 10 years? Or just an afternoon?)

Then there is the fact that partners plateau for remuneration in terms of equity partnership using a time served system. Firms also make partners retire based on age in order to clear space in the equity ranks for new blood – even if they are easing out one of their best lawyers. (I.e. partners are asked to retire not because they’ve reached statutory retirement age, but because the time-based system needs them to leave, as the pyramid is based on seniority progression and time waits for no partner.)

From the beginning to the end of a lawyer’s professional life, time rules supreme. And that really makes you wonder if there is a way through it and beyond it.

In a recent podcast interview with Electra Japonas for her ‘The Optimised Lawyer’ series, I mentioned that to change the way the world of law works we will have ‘to change the laws of physics’, i.e. breaking the legal universe’s omnipresent rule of law-time.

Is that possible? It has to be said that when one sees what we are up against it’s hard to see anything changing. The laws of physics however keep evolving. We discover new realities. How we see the universe does change and always will change. So, perhaps the legal world can also one day break the rules of law-time? Here’s hoping.

By Richard Tromans, Founder, Artificial Lawyer, May 2022