Law firm charges for quality not quantity

The expression "billable hours" has acquired an almost unsavoury connotation outside the professional firms, especially if you happen to be a victim of them.

American sit-coms even make jokes about lawyers and billable hours.

Yet the success of many lawyers is still measured by the number of billable hours - in effect, the charge-out income they generate for the firm - although it is a flawed and rigid yardstick.

As the guru of professional firm management, David Maister, explains: "Time-based billing causes individuals (and firms) to focus on the quantity of work, and not at all on its calibre."

Also, when the bill arrives, many a client of a big law firm has the uneasy feeling that the fees are rigid too. Do they truly reflect the calibre of the work done?

One head of a law firm who thinks they don't, has moved to change all that. An import from the commercial world, she has the southern belle-like name of Meredith Hellicar and runs a leading Sydney firm, the rather alarmed Corrs Chambers Westgarth.

The unlawyerly-like Hellicar, who has taken the firm by the scruff off its wig, is rewriting partners' contracts so they are paid by their all-round contribution to individual profits rather than by the sledgehammer of billable hours.

As Hellicar colourfully puts it: "This obsession with 'the only way I get to be seen to have big balls is to have big bills' - it's neanderthal". Thus many a client has indirectly funded a partner's path to the top.

When she arrived at Corrs a year ago with a brief to reshape the firm, 45-year-old Hellicar was amazed at her new firm's billing policies.

"Why should a client pay the same amount for two hours of work thinking up the most incredibly complex, creative new corporate structure as two hours of document processing," she told the Australian Financial Review, albeit pointing out the obvious.

"As an outsider coming in, I see inefficiencies in the process."

Although she was admitted to the NSW Bar in 1983 but never practised, Hellicar is an outsider to the profession who arrived at Corrs after top jobs with TNT, Esso Australia and the NSW Coal Association.

She was clearly shocked by the legal fraternity's outdated management practices, and especially by the way big firms are organised.

"[Futurist] Phil Ruthven calls it a pre-agrarian structure in a post-infomatics age. That says it all," explains Hellicar.

"Everyone else has developed around the world but the legal profession is still there. I think it causes people to behave in an illogical way."

The newcomer was also astonished by the big firms' preoccupation with size, presumably for prestige sake.

"I've never worked in an industry where the first thing people talk about is how many partners they've got. They're obsessed."

Hellicar reorganised Corrs along corporate lines before Phillips Fox did so.

She eliminated State-based partners - "fiefdoms", she called them - in favour of a national management system in which only five of the nine-strong top team are lawyers.

Apparently, Hellicar's reorganisation hasn't met with universal delight. Some partners have already left and Hellicar quite cheerfully predicts others may follow suit because, though they might have been successful in a more regulated environment when the partner rather than the customer was king, she expects them to struggle in a more open market.