The billable hour model is becoming obsolete as profitability limits, revenue caps, and high staffing costs constrain earnings, especially for solos and small firms. Small firms commonly collect only a few billable hours per day, making growth dependent on hiring additional billers. Billing mistakes and manual time tracking produce client disputes and frequent discounts, which damage relationships and inhibit creativity and alternative service delivery. Many lawyers dislike time-based billing, and technological advances such as generative AI and legal automation are accelerating shifts toward subscription and fixed-fee legal service models.
Kerbis and his co-panelist, Kimberly Bennett of Fidu, agree that the billable hour isn't the most profitable model. This is particularly true for solos and lawyers at small firms. "What you're doing is you're capping how much revenue you could earn in a day," Kerbis says. "And of that, how much will clients actually pay?" The panelists point to years of legal trends reports issued by practice management companies.
These reports repeatedly reveal that lawyers at small firms only collect on a few billable hours a day. "To generate more revenue, you have to hire more billers," Kerbis says, "and lawyers are expensive." As Bennett sees it, the trends reports also reveal that human error is a part of the billing process. As a result, she says, clients will often push back on hours billed, and lawyers will often offer discounts.
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