Rational choice theory hypothesises that individuals use rational calculations to make rational choices to achieve outcomes that are aligned with their own personal objectives.
One of the biggest (of many) problems I have had with the hourly rate in the legal industry – dating back to my start in the early 1990s – is that it assumes every hour in the day is equal. But, as anyone who has worked in private practice law will tell you, this simply isn’t true.
What do I mean?
Well, to say that the value of the work that we do at 6am, is the same as the value of the work that we do at 12am, is the same of the value of the work that we do at 9pm, is the same as the value of the work that we do at 12pm is simply false in my opinion.
And, critically, this doesn’t take into account an important factor; namely to anyone who has worked in private practice for any length of time, saying that an hour of work (from a personal cost perspective) at 10% utilisation is the same as an hour of work at 130% utilisation is simply insulting.
So what’s the answer?
Well, if hourly billing is your thing, has the time come to consider load weighting?
How would load weighting work?
Well, if you’re a morning person, what if you told your customer that your time between 6am and 10am was going to be at a higher premium than your time between 6pm and 10pm?
Conversely; if you are an evening person, what if you told your customer that your time between 6pm and 10pm was going to be at a higher premium than your time between 6am and 10am?
Or, alternatively, if you haven’t seen your family for several days because of a busy workload, you tell your customer that your 40th working hour that week was (emotionally, because it will rarely be economically) worth than your first or tenth hour (as opposed to the scaling discount most firms apply)?
As an industry we need to move away from the one set billable hour value; but to do that we first need to accept that not all billable hours are equal and to start talking to our customers about charging a premium for those hours in the day/week/month/year that are worth more – to both us and them – than others!