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Unfair and Unbalanced

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The Slow Death of the Billable Hour


shapeimage 15Everyone who works in a service industry that bills by the hour has a joke or a one liner about the practice: “Work quickly, but not too quickly.” Har har har. There’s something wrong with a billing system that rewards sloth and encourages bill-padding and inefficiency. Yet law firms and PR companies are loathe to give it up.

I’ll grant the inventor of the billable hour some major props. It’s genius. A consultant can bill time for an idea that came to him or her while taking a shower or staring out a window. While driving to visit a client’s office, you can put in a call to another client and bill both of them for your time. And, of course, you may bill to the quarter hour or half hour, so 30 seconds of your time gets billed for 15 minutes, or 30 minutes. Like I said: Genius.

It’s also wasteful, and inefficient and anti-client. I could go on. But I know there’s more than a few PR consultants who have burned a significant number of billable hours trying to explain to clients how hourly billing actually works and feebly tried to defend the practice when they knew in their hearts it was working almost entirely for their firm’s benefit and not for their client’s.

A PR executive once told me about a boss who gave him demerits in an annual job review for always trying to take the shortest route from point A to point B. He cautioned the guy about moving in straight lines because the firm needed to demonstrate to clients that they were spending more time working on the account -- even if the work produced exactly the same results had the task been accomplished in fewer hours. He was really saying that the account manger needed to be more billable to the firm so they could bill the client $350 a hour and allocate something like $75 a hour in salary.

Now I don’t begrudge anyone trying to make a buck. But under this kind of accounting there’s a built-in profit margin somewhere north of 250 percent. And the company in some cases is happier -- hell they even encourage it  -- when more time is taken to complete a task, or the more verbose everyone becomes on memos and proposals. Is that reasonable? Is that customer friendly? There’s no getting around it. If you charge by the billable hour there will be times you’ll feel like the cab driver who takes unsuspecting tourists on circuitous routes to their destination.

Pretty soon, clients are going to get hip to this accounting scheme and it will revolutionize the PR industry. Already it’s beginning to take hold in the  legal profession -- which is where the practice probably originated. See: “Beat The Clock,” “The Scourge of the Billable Hour,” and “Who’s Cuddly Now? Law Firms.”

Even political candidates are finding that flat fee accounting for consultants is usually more efficient, less expensive, and helps keep everyone honest: “Democrats Try To Reign In Fees on Consulting.”

One can only hope the clock is ticking on the billable hour.


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