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November 24, 2022

Study: Billing by the Hour Makes You Suck

A recent study from City University London determined that "the 'tyranny of billable hours' in professional service firms leads to over-charging clients, overworking junior employees, and avoiding strategic issues." Thanks to Professor Obvious, his two-year study of tax lawyers at an undisclosed Big 4 firm, and his grant from the Institute for the Verification of Stupid Shit, now the world knows empirically what first-year staff learn in about a month.

Some of the study's intriguing insights include the following:
  • Partners and managers don't want to get bogged down in non-billable things like "strategy" and "leading people."
  • To increase their chances of making partner, junior staff are encouraged to bill as many hours as possible at the expense of developing the actual skills that may be required of them if they ever do make partner.
  • Billing by the hour "encourages active game-playing, intervention and entrepreneurial manipulation." I used to get beat up for not logging enough billable hours. I would also get beat up for going over budget. When I was a little kid I had a babysitter who would threaten to spank me if I didn't stop crying. All of these are brilliant ways to both piss off and confuse your underlings. Actions labeled as "game-playing" and "manipulation" may simply be defense mechanisms.
  • Many non-billable tasks are accomplished on the employee's own time, "resulting in very long hours being the norm at most big firms." It took two years to conduct this study, indicating that "very long hours" are not the norm at City University London.
  • Clients are classified as either "bill sensitive" or "unsensitive [sic]" and are charged accurately or overcharged, respectively, because integrity and objectivity are two of the core values of our profession.
  • The billable hour is an employee control strategy that in effect commoditizes staff and results in their "financialization." CPAs are good with numbers, not people, and billing rates allow us to turn our people into numbers. Problem solved.
  • Most junior staff readily accept and conform to this dysfunctional culture, putting their work-life balance, health and well-being at risk. So quote this study the next time you call in "sick."
Believe it or not, there are some firms that do not track time or bill their clients by the hour. Corbett, Duncan and Hubly, a mid-size firm in the Chicago area, recently held a time sheet burning party to celebrate their move away from time billing. Depending on where you are, a time sheet burning party either sounds super cheesy or deeply cathartic. Now go bill your best customer for the 0.2 hours you spent reading this article.

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