Big law firm hours explained – competing interests

This is the second in our series of three posts relating to the idea that long hours, substantially over 40 hours per week, lead to reduced cognitive function and poor performance, most notably lower productivity per unit of time.

Our first post reframed and rehashed these arguments in the context of the medical profession, notably the long hours of medical residents, which some medical groups now suggest should be limited to an average of 80 hours per week.

We wrote how even if you exempted malpractice in the legal, actionable sense from the discussion, professional ethics should lead doctors to reduce hours for residents. (Question: are all hospital administrators practicing physicians? Certainly shareholders are not.) The next profession we are going to analyze is the legal profession. Not only do we have direct experience here, we have also been in the position of law firm client (too many times, most would say). The situation for lawyers is akin to that of doctors: malpractice is an actionable claim for injured clients; professional ethics create obligations governing one’s practice.

If you accept the general premise that lengthy hours have a dual effect of both reducing productivity and increasing the likelihood of mistakes, then lawyers, and by extension their law firms, are probably committing professional errors (meaning a breach of the general code of ethics requiring competence), if not actual malpractice, by increasing billable hours per associate. Various times throughout the last ten years (and obviously much before that as well), first-year lawyers have been the recipients of dramatic increases in salary. Of course, there’s no such thing as a free lunch, and the tradeoff for associates has typically been increased billable hour requirements. Firm have typically chosen to increase the hours of associates and partners rather than maintain the hour requirements and increase the numbers of lawyers. This increase in hours is driven by the increase in salaries, which in turn drives tuition hikes.

So, where are the studies that show the increase in mistakes for lawyers, like the ones for doctors? They don’t exist. Why is that? Several reasons:

1. Big law firms typically bill clients by the hour for legal services. If productivity declines and it takes longer to resolve matters, the first and most obvious result in increased billable hours. So, rather than poor medical outcomes for patients, which are noticeable to those outside the hospital, we have larger bills, which are certainly noticeable to the clients but not distinguishable from “business as usual.”
2. Errors that would lead to malpractice seldom lead to actual malpractice claims. Not only are errors often caught by other lawyers involved in a matter, but the errors themselves are harder to identify as errors, since they seldom have immediate effects and the true outcome may not be known for months in a transactional matter or even years in a litigation. Many errors are harmless because the circumstances that would trigger them fail to arise; a choice of law clause only becomes relevant when litigation is contemplated. Even when matters do turn for the worse, the idea that a negative outcome could be traced to a single error, which could then be traced to acute or chronic sleep deprivation, is harder to imagine.
3. It’s possible that even when operating at a sub-par level, the types of lawyers who work at big firms may still perform at the standard of care, which is more generally based on lawyers overall. This argument has a lot of assumptions and perceptions built into it, which should be made explicit:

1. Associates who go to big firms are commonly perceived (at least among those seeking to go to big firms and among the big firms hiring them) to be of higher quality than those who aim differently following law school. They are perceived to be generally more capable legally.
2. Associates at big firms are perceived to be harder workers, or at least to have worked harder, in terms of more hours, during law school. Big firms prize law review membership and high grades, assuming that the former’s hourly commitment combined with the latter’s intellectual performance will translate well to the firm environment.
3. One of the key skills for lawyers is attention to detail, and that is another one of the skills for which good grades and law review time are supposed to be proxies.

Another difference between medical practice and legal practice, related to point #1 is that because of the fee-sharing restrictions in legal ethics codes, lawyers still run their own practices. Not always from a day-to-day perspective, where smarter firms are hiring non-lawyers to manage the business while leadership is to be provided by senior lawyers. The medical field has not had such a restriction in a very long time, exacerbated perhaps by early concerns about the effects of medical malpractice exposure to individual doctors. That led to the ability to restrict professional liability and to growth to spread risk. Many of those larger entities became public entities with shareholders and other investors. While it is obviously common for hospitals to be run by doctors, it is not required. The key argument for why law firms should not be owned by non-lawyers is that the profession does not want lawyers to be subject to people who did not have the same ethical obligations as the lawyers. Where this tension currently exists, however, is in corporate legal departments, and the complications are clearly there.

So these assumptions might explain why the rate of error would be lower, but does it really make any sense that lawyers would actually err less than doctors? Doctors constitute a much smaller universe than lawyers, and few lawyers who would claim that medicine is an “easier” field for those with less powerful intellect. If doctors can make apparently clearly measurable errors, wouldn’t it make sense that lawyers make at least the same number of errors? If anything, the type of errors committed and the circumstances have a greater impact on what outcomes are measured and the perception of those errors.

Do firms have an ethical obligation to reduce attorney billable hours to reduce risk of poor performance? Do they have an ethical obligation to reduce billable hours to reduce low productivity, which results in larger bills for the same work? What about clients? Certainly the primary clients of large law firms are large corporations, who might be more knowledgeable than individuals about these effects. Also, given the outside legal budgets of large corporations, they probably experience low-probability events on a regular basis and so can expect that there is some harm to them from these issues. Does anyone know of large corporations that have firm restrictions on the number of hours that may be billed to them by a single lawyer, or by such a lawyer in a week, month, or year?

We are attempting to identify some future research opportunities in this field. Does anyone have connections inside a legal malpractice insurer? We would be interested in tracking claim experience by firm size and hour requirements. Similarly, we are preparing a proposal for corporate counsel at large commercial firms to evaluate lawyer performance in light of these issues.

Business people inside corporations and acting as consultants are our next area of inquiry in this sleep deprivation/overwork trifecta.