April 25, 2025
By Bob Glaves | CBF Executive Director
An Underrated Step Forward for Access to Legal Help for Everyday People
If you are a regular reader of this blog, you know my feelings about the billable hour and the damaging effects it has had on access to legal services for everyday people and small businesses. It is a self-inflicted scourge of our profession on affordability in the consumer and small business market for legal services.
Even though it is of relatively recent vintage in the legal profession (only taking hold as the prevalent way of pricing in the 1970s), the billable hour has insinuated its way into so much of our legal life that it makes it an especially hard habit to shake. One example of that insinuation is the practice that developed over time that fee petitions in court are required to include hourly time entries regardless of what the actual fee arrangement was with the client.
The good news on this front is that the Illinois Supreme Court recently adopted a new rule clarifying that fee petitions in Illinois courts can be based on the fee arrangement the lawyer actually has with the client, including other pricing models that are more affordable and accessible for everyday people. Adopting this rule is a big step forward to modernizing the practice of law to encourage value-based pricing that is more transparent and affordable.
The fundamental access problems the billable hour creates
Whatever its merits may be in the corporate market, where we have experienced buyers and sellers of legal services, for consumers and small businesses the billable hour makes legal services less affordable and accessible because it lacks transparency and certainty and misaligns incentives for efficiency, innovation, and value.
When people seek out legal services, they typically are looking to solve a problem, manage a risk, make a deal, right a wrong, or find peace of mind on an issue that is important to them. In their minds, a good lawyer is a means to achieve one or more of those ends as effectively and efficiently as possible.
The billable hour, on the other hand, focuses on the lawyer’s inputs rather than on the value the lawyer is delivering to the client, and it rewards inefficiency rather than reaching solutions as quickly as possible. It also creates a perception of unaffordability when the client does not know the cost and the value they will receive; people generally won’t buy things of uncertain cost or value unless they feel they have no other choice.
Yes, the price still matters, but when set fees (which come in many forms) are offered with flexible service options, like limited scope representation, they give clients the transparency and certainty to make a value-based judgment about affordability that the billable hour never can.
The cumulative effect on access since the billable hour became the prevalent pricing model
There was a time not long ago when legal services were affordable for everyday people, and lawyers could make a good living serving them. That all started to change in the 1970s, when the billable hour gradually became the prevalent form of pricing in the consumer and small business markets. Prior to that time, fixed fee pricing was the norm in the market, and to this day, the areas of the legal market where fixed fees are still the custom are much better functioning (along with the contingent fee market).
Flash forward to today and the reality is that most middle-class people and small businesses believe that access to legal services is out of reach for them, creating a huge gap in the legal market. While there are many other reasons why the billable hour should go, adopting better forms of pricing is a key step both to make our services more affordable to everyday people and to enable lawyers to sustainably serve this huge and growing gap in the market.
However, as noted at the outset of this post, as the billable hour became more dominant, it made its way into rules and professional practices that have had the effect of discouraging other more transparent and predictable forms of pricing. The fact that other pricing models are commonly referred to now as “alternative pricing models” underscores the problem.
The courts (unintentionally, I think) gradually got into the act too, as recognized in one of the comments to new Rule 300:
“Historically, courts have required attorneys’ fee petitions to be based on an hourly fee arrangement even when that was not the agreement with the client. Under Rule 1.5, there are many fee agreements beyond the traditional hourly billing model that are allowed. Examples include recurring fixed monthly fees, fixed fees for an entire case or part of a case, and contingent fees, among others.”
Just as it took time for the billable hour to become dominant, it will take some time for these other value pricing models to become more widely accepted and integrated into the broader legal market. By adopting Rule 300, the Supreme Court has taken a big step towards accelerating that process. And none too soon, as AI and other technology that enables people to solve things faster and more efficiently continues to take hold, the business model of charging based on the time spent rather than the value delivered will only become more unsustainable.
Rule 300 and Value-Based Pricing
The Comments to Rule 300 give a good summary of why value-based pricing is so important and will encourage its wider adoption.
“This Rule clarifies that any fee agreement that is reasonable under the circumstances under Rule 1.5 of the Rules of Professional Conduct may be the basis for an attorney’s fee petition, with limited exceptions.
…..
The value of the attorney’s services to the client involves more than the actual legal services provided. It may include the factors identified in Rule 1.5 and applicable caselaw but may also include other value the client receives from a particular fee agreement that is not based on the traditional hourly billing model. Examples include price transparency, price certainty, risk management, convenience, accessibility, and peace of mind….
Value-based pricing is the future, and Rule 300 is a big step towards getting us there!