Proposed cap on lawyer hours a tough sell in legal business boom

REUTERS/Yuriko Nakao
  • An 1,800-billable-hours cap among well-being recommendations in NYSBA report
  • Law firms already struggling to meet client demand, boosting associate compensation amid a talent war

(Reuters) - Is capping annual billable hours at 1,800 a key to improving attorney well-being, or a pie-in-the sky idea when large law firms are straining to meet demand and showering associates with unprecedented pay?

It’s both, say legal industry experts.

Law firm and lawyer wellness consultants applauded a new report from a New York State Bar Association task force that highlighted how heavy workloads can harm attorney mental health, with lack of downtime cited as a top stressor.

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But the task force’s recommendation that legal employers cap lawyers' billable hours at 1,800 a year isn’t realistic for most big corporate firms, they said.

“I think an 1,800-billable-hours cap is going to be a challenge,” said Vertex Advisors Group founder Robert Kamins, who advises law firms on management issues. “Law firm profitability and compensation is largely driven by hours worked.”

And there's plenty of work to go around. A Wells Fargo Legal Specialty Group survey of the 200 highest-grossing U.S. law firms found that demand, rates, and productivity were each up 6% in the first half of 2021. A record-breaking boom in global merger activity has kept corporate practices extra busy.

It's also hard to justify capping hours after many top firms increased starting associate salaries this summer and are handing out larger-than-ever associate bonuses, said Lisa Smith of law firm consultancy Fairfax Associates.

“For firms paying first-year associates $205,000 and seventh and eight-year associates getting bonuses in the neighborhood of $400,000 to $500,000, is a 40-hour work week realistic? Probably not,” Smith said.

Most large firms maintain bonus targets of 1,850 to 2,000 billable hours. But it’s not unusual for high-performing associates to bill 2,200 or more hours, consultants say.

“The profession has created this expectation, on the part of clients, that lawyers are available 24/7," said Kathryn Grant Madigan, a partner at New York firm Levene Gouldin & Thompson who examined employers' roles in attorney well-being as part of the bar's task force. "That’s not sustainable over the long run.”

Other task force recommendations, like encouraging lawyers to use up vacation time and letting them actually unplug when they are away, are more feasible than capping hours, Smith said.

Patrick Krill, an attorney who counsels law firms on addiction and well-being issues, agreed that an 1,800-hour cap may be unrealistic now. But he said the proposal could help catalyze future change.

“Especially if other jurisdictions follow suit, I could see this idea gaining more traction, or at least encouraging a more honest and searching discussion about our culture of overwork,” he said.

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Karen Sloan reports on law firms, law schools, and the business of law. Reach her at karen.sloan@thomsonreuters.com