Originally published by Ron Baker on LinkedIn: Is Hourly Billing Unethical and Unprofessional?
Ethics—originating from the Greek word ethos, meaning habit—is a branch of philosophy that explores and analyzes moral problems, concerned with questions such as: What kind of moral principles and values should guide our actions? What do we mean by right and wrong?
Immanuel Kant proposed broad principles to provide a framework for making moral decisions, described as categorical imperatives:
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Act only on that maxim by which you can at the same time will that it should become a universal law (e.g., no stealing).
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Act so that you treat humanity whether, in your own person or in that of another, always as an end and never as a means only (people are to be respected because they have dignity. Moral agency is what gives humans dignity).
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Kingdom of Ends formulation: You should act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time.
If you apply this test to hourly billing, you find it fails miserably on all the questions, especially the first and third.
Would you want hourly billing to become universal? Would you want all businesses to utilize it?
If the Golden Rule is true—treat others as you yourself would want to be treated—how can one defend the morality of hourly billing? Would you accept that method of pricing from a hotel, an airline, or a grocery store?
Is Hourly Billing Unprofessional?
“A professional is someone who is responsible for achieving a result rather than performing a task.”
––Michael Hammer
The billable hour (and timesheets) are unprofessional as they keep the professional focused on the tasks, not the result.
Day laborers are paid for performing tasks. Professionals should create results. Yet the empirical evidence from nearly a century of the billable hour regime proves it has deleterious effects on professionalism.
William Ross states the following in his book, The Honest Hour:
Most dishonest billing is the perfect crime. Because there is no practical manner of verifying the accuracy of most time records, every attorney who has billed time knows that hourly billing creates tempting opportunities for fraud.
Ross ends his book The Honest Hour by saying, “Despite its potential for abuse, time remains the best means of billing clients. Hourly billing therefore ought to be reformed rather than abandoned.”
Misalignment in interest
The American Bar Association and courts have opted for imposing standards on hourly billing. Here’s a partial list of where legal brainpower is being applied: