Jackson Lewis sheds billable hour as evaluation tool

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The billable hour is critically ill but not yet dead at Jackson Lewis.

The national law firm Jackson Lewis, which represents employers in labor and employment disputes, came to Minneapolis in 1997, opening the company’s 21st office. It was one of the first Minnesota firms to offer clients flat fees and other alternative fee arrangements.

As if that wasn’t radical enough, this year it announced that as far as it was concerned, the primacy of the billable hour is dead — billables would no longer be used for purposes of evaluating attorneys. Instead, associates would be evaluated for competency from a scale of one to four, one being the best, and those with mostly ones and twos would be eligible for a bonus. Lawyers still keep track of their hours for various informational purposes, but associates no longer need to amass 1,900 hours a year to be bonus-eligible.

For one thing, it’s a system that seems to appeal to millennials, who aren’t motivated by money or prestige, said managing shareholder Gina Janeiro when she sat down with Minnesota Lawyer editor Barbara Jones.

Minnesota Lawyer: Did you formerly use an hourly rate for billing clients?

Gina Janeiro: We still do use an hourly rate. In 2006 Jackson Lewis was kind of a pioneer in alternative fee arrangements. We have created different models that work with the client’s needs. For example, we have arrangements where they pay a certain amount for their legal spend for the year. It’s fixed, that’s what they’re going to spend. We look back at their legal spend the last three years and figure out the appropriate number. We’ve really fine-tuned that and other firms are doing it as well. Many clients like it, they can budget and plan.

The other great thing about the model of fixed fee alternative fee arrangements is that Jackson Lewis partners with that client to add value in other places. For example, for one client we have a counseling bank. If any attorney around the country provides advice and counsel, they can look up what advice might have been given in another jurisdiction to make sure the company is getting consistent advice across the board.

One of the benefits of the alternative fee agreement is that you can really look at more than one case. By tracking advice and counsel we can also track trends for the client.

When you have alternative fee arrangements, you usually have a team. We are efficient and consistent with the advice we’re giving and clients are getting efficient and consistent advice as well.

We also partner with the client in helping them with preventive measures that, hopefully, in time, will reduce their legal spend. [For example], you don’t have to reinvent the wheel—we have a data base of handbooks and [other employment documents].

ML: So you’re saying the fee agreement is part of a full legal services package?

GJ: Absolutely. It solidifies the partnership. It’s becoming much more prevalent in the legal community, definitely in the employment sphere. It was not new to Jackson Lewis.

We still track our hours to see how much time is spent on a project because the arrangement has to work well for the client and for Jackson Lewis. One of the things that were so contradictory was clients want efficient, quality work, and they want it now, and law firms have in the past incentivized attorneys to bill hours. It’s just at complete odds with each other. So last year, Jackson Lewis announced that it was no longer going to use the billable hour as an evaluative tool.

ML: Have you had any problems since then?

GJ: I haven’t heard of any problems. I don’t know if it was confusing, I didn’t think it was confusing to say we were eliminating the billable hour as an evaluative tool. I’ve heard of managing shareholders say, “we haven’t eliminated the billable hour.”

I think this is a huge benefit in terms of being available to really develop associates. Some associates have difficulty looking at professional activities in any other way (than billable hours). To me, I think we’re saying we are going to develop you to become the next shareholder of this firm going to be rated on the billable hour. … Associates are rated on core competencies and it’s not any different from before except if you excel on these, you are eligible for a bonus. (Formerly, associates were not eligible for a bonus unless they had billed 1900 hours a year.)

The millennials are not as motivated solely by money or prestige. At least in Minnesota, that’s never been a focus.

ML: How does this plan affect the partners?

GJ: In our office, it hasn’t affected anything. The firm as a whole has a greater emphasis on developing associates. We’ve eliminated the billable hour requirement; we’ve ramped up the mentorship programs nationally and in each office. That’s a national push from our chairman.

ML: It’s also kind of how things used to be. It is a return to a certain point of view about the profession.

GJ: Yes. One of the things clients ask about is results-driven fees. Let’s reward the legal work. It’s a performance bonus.

We’re still billing the hours, we’re still tracking our time but we’re not tied to it. We’re still giving bonuses, I’m hoping more. It’s a progression of how we’re going to serve our clients.