ABSTRACT
The ‘billable hour’, as enshrined in the book and the film, The Firm, became one of the major factors in billing practices over the last 10 years. The billable hour, usually calculated in accordance with the Law Society’s ‘Expense of Time’ formula, is based on the cost of production rather than on the value to the client. As long as the work kept coming in, then the billable hour was a sustainable pricing policy. Problems started to arise during the recession, where the volume of work started to decline and firms were left with high overheads which demanded high charge-out rates. In some cases, these rates began to look excessive to clients, who had also become highly cost conscious in their own businesses and who began to look around for better rates. Hourly rates began to drift away from the cost of production towards market-driven rates of charge, and the charge-out rate wars began.
