What happens to the billable hour when the work gets faster?

A task takes six hours. With good tooling it takes forty five minutes. The lawyer's judgment about the answer is unchanged, arguably sharper, because they are not exhausted by the time they reach it.

What is the client paying for?

This question gets asked rhetorically and then dropped, usually with a comment about how the billable hour has survived every prior prediction of its death. It has. But the arguments this time are structurally different, and worth taking seriously rather than waving away.

The old efficiency gains were absorbed invisibly. Word processing, email, electronic research: each made lawyers faster, and the profession quietly reset expectations about what an hour of work contained. Nobody itemised the productivity gain because nobody could see it.

This one is visible. Clients know what these systems can do, because they are using them in their own businesses. A general counsel who has watched her own team run a first pass across a hundred contracts in an afternoon has a different view of a six hour line item than she did two years ago. The information asymmetry that protected the billing model is gone.

Three things follow, and firms are choosing between them right now whether or not they know it.

The first is that some work simply reprices. Not because of a negotiation, but because clients stop accepting the old number for tasks they can see are no longer six hour tasks. This will happen first in the most commoditised work and it is already happening.

The second is more interesting. Efficiency gains do not have to be handed to the client. A firm can absorb them as margin, at least for a period, and firms are unusually well placed to do this because they control the information about how the work was done. This is the quiet answer most of the market is choosing and nobody says out loud. It is also unstable, because it depends on clients not asking.

The third is the one that actually changes anything. If a task becomes cheap enough, work that was previously not worth doing becomes worth doing. Small volume diligence that used to be scoped out. The review of the whole document set rather than a sample. The regional language batch that nobody could economically process. Firms that go this way stop competing on the price of the hour and start competing on what they are able to offer at all.

The uncomfortable middle position is a firm that has become faster, has not repriced, has not expanded scope, and is quietly hoping the client does not notice. That is a strategy with a shelf life measured in client procurement cycles.

The question worth putting to a management committee is not whether the billable hour survives. It is which of those three the firm has actually chosen, because doing nothing is a choice for the second one.