Clifford Chance might be contemplating scrapping the billable hour as a tool for evaluating lawyers, but it's proceeding with caution.

The Magic Circle firm announced last week that it won't use billed hours to assess the performance of some of its lawyers. But the pilot program comes with a series of limiting factors. For starters, it only applies to attorneys in Abu Dhabi and Dubai, United Arab Emirates—out of the firm's 33 offices on six continents—and it's limited to just one year.

Partners are also excluded from the policy shift. That leaves just 68 attorneys from trainee to counsel, out of the firm's roughly 2,200 lawyers worldwide, who won't need to worry about how the amount of time they spend on client matters affects their compensation or status within the firm.

And these Middle East lawyers will not be freed from having to record their time: All will have desktop dashboards, updated daily, that show where they've spent their time across a number of categories.

Still, for these 68 lawyers, some changes will be significant. With utilization—total billable hours as a percentage of total billable hours available to be worked—removed from the firm's assessment of lawyer contribution and performance, they will no longer have to meet threshold requirements.

Instead, they'll be evaluated on a broader mix of factors, including whether they are bringing in new clients, how they might be contributing to innovations in the practice of law—an area the firm has branded as “Best Delivery”—and whether they advance the firm's diversity, wellness and pro bono goals.

“While we have always encouraged our lawyers to spend time on a broad range of value-adding activities, from business development to Best Delivery, the perceived emphasis has remained on utilization,” Clifford Chance global managing partner Matthew Layton said in a statement. “With this pilot, we are trying to break the dominance of that single metric and allow our teams to think more broadly about where their time is best spent.”

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Testing the Waters

The firm has taken steps to reduce reliance on billable hours in the past. In 2010, Clifford Chance revamped its bonus system for U.K. associates to eliminate a minimum billable hours threshold.

But the impulse for the current initiative came out of the two U.A.E offices, where Clifford Chance has had a presence for over 40 years.

“The Middle East team have been in the vanguard on this project since the start,” spokesman Michael Osbourne said in an email. “They identified and developed the opportunity.”

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Perhaps there's something to be said for sticking a toe into the pool before diving in.

In 2014, U.S. labor and employment firm Jackson Lewis announced a similar plan, but on a larger scale. Starting in January 2015, the firm's 293 associates were to be assessed on efficiency, client service, responsiveness, team orientation and pro bono commitment—not on the billable hour.

Earlier this spring, however, the ABA Journal reported that Jackson Lewis quietly readjusted its policy at the start of 2017, reinstalling billable hours as a metric for determining associate bonuses, based on feedback from both clients and associates.

“Performance management has been driven predominantly by these metrics for so long that shifting that model is scary,” said Marcie Borgal Shunk, president and founder of The Tilt Institute, a law firm management consultancy.

Despite its drawbacks, the billable hour provides a level of certainty—something that's measurable and can be tracked by the lawyer who's being evaluated—in a way that many alternative criteria cannot.

“There are models that law firms can look toward, but its a pretty monumental shift in thinking,” Shunk said. 

Former Kirkland & Ellis partner Steven Harper, author of “The Lawyer Bubble” and a longtime critic of the outsized role played by the billable hour in the legal industry, called any effort to reduce the influence of the metric as a purported measurement of “productivity” and “performance” a good start. He blames billable hours for both poor morale in firms and for inefficient service delivery.

“Kudos to Clifford Chance on that score,” he said in an email.

But he questioned why partners were left out, and he argued that a firm truly committed to eliminating the culture stemming from “hours-at-work” pressure would have to go further.

“It would stop requiring attorneys to bill (or account for) their time altogether and focus on outcomes: attorneys' work product, results for clients, client satisfaction with outcomes in light of legal fees paid, and the like,” Harper said.

Clifford Chance, however, emphasized that there's much it can gain by collecting data from this limited experiment in Dubai and Abu Dhabi.

“They provide an excellent location for a pilot as they are large enough to give us a robust and meaningful trial group, but small enough for us to be able to spend a lot of time with the teams learning what works, and what doesn't as we progress,” Osbourne said.

Shunk agreed, calling it a wise move to test any proposed major shift on a smaller scale.

“I think piloting any new concept is a good approach because, ultimately, you can work out the kinks, fail small, and then make the changes you need to make,” she said. “You can also use it as an example for the positive and articulate the benefits more clearly for a broader audience.”

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