The billable hour originated at Hale and Dorr in Boston, where managing partner Reginald Heber Smith introduced lawyer timesheets in 1919 to measure how the firm spent its time, not to bill clients. Hourly billing became the dominant way to price legal work only in the 1960s and 1970s, after the American Bar Association's 1958 pamphlet urged lawyers to sell time in units and the Supreme Court struck down bar minimum-fee schedules in 1975. Every date below is sourced at the end.
Before the hour: how lawyers charged in 1900
For the first half of the twentieth century, time was not the unit. A lawyer quoted a fixed fee for a will or a closing, took an annual retainer from a company, or worked a contingency on a claim. Where the number came from was judgment: what the matter was worth, what the client could bear, and what the local bar association's minimum-fee schedule said a title search or a divorce should cost. Those schedules were published, enforced by the bar, and treated as the floor.
Nobody wrote down how long anything took, because nothing in the price depended on it.
1919: a timesheet to run the firm, not to bill it
Reginald Heber Smith took over as managing partner of Hale and Dorr in 1919, a job he held until 1956. He had spent the previous years running the Boston Legal Aid Society and writing Justice and the Poor, and he brought a reformer's appetite for measurement to a private firm.
He had every lawyer keep a daily record of time. His stated reasons were managerial: to see where the firm's capacity was going, which matters and clients were actually profitable, whether anyone was neglecting client work in favor of socializing, and how to divide profits among partners fairly. The record was for the firm to understand itself.
He was modest about the invention. “Really my only contribution was to decide that the minimum time entry should be one-tenth of an hour,” he wrote later. Tenths add cleanly by hand, so a clerk totaling a month of entries never touched a fraction. Six minutes was a bookkeeping convenience. We have a separate essay on how that convenience became the unit of value.
In 1940 the ABA published Smith's method as a four-part pamphlet, Law Office Organization. It spread through the profession as office-management doctrine. Firms adopted the timesheet to manage themselves, and for another two decades that is mostly what it did.
1958: the ABA tells lawyers to sell time
The shift from measurement to price has a specific document behind it. In 1958 the ABA's Special Committee on Economics of Law Practice published The 1958 Lawyer and His 1938 Dollar. The argument was that lawyers' real income had slipped over twenty years while other professions' had not, and that the remedy was to run a practice more like a factory: sell services in simple, countable units, and manage the people producing them by their output.
The unit the committee proposed was the hour. It estimated that a lawyer had only about 1,300 fee-earning hours a year, roughly five chargeable hours a day across 260 working days, once bar, civic, administrative, and personal time were subtracted, and it urged lawyers to record time diligently so none of those hours went unbilled.
That reframing turned Smith's internal ledger into an invoice. The same timesheet that told a managing partner who was pulling weight now told a client what to pay.
1975: the Supreme Court removes the alternative
Hourly billing still had a competitor through the 1960s: the bar minimum-fee schedule, which gave every lawyer in a county a published fixed price for routine work. In 1971 a couple named Goldfarb tried to find a Fairfax County, Virginia lawyer who would do a title examination for less than the schedule's $230 and could not, because the schedule was enforced by the state bar.
They sued. On June 16, 1975 the Supreme Court held in Goldfarb v. Virginia State Bar that the legal profession is subject to the Sherman Act and that a minimum-fee schedule is price fixing. Fee schedules disappeared nationwide.
The decision was meant to make legal fees more competitive, and for routine consumer work it did. But it also removed the profession's shared reference points for fixed pricing at the exact moment corporate clients were demanding itemized bills. The one pricing method that needed no schedule, no negotiation, and no knowledge of what a matter should cost was the hourly rate. By the end of the 1970s it was the default in corporate practice.
1980 to today: the hour becomes the target
Once the hour was the product, the number of hours became the goal. The 1,300 the ABA committee treated as a natural ceiling in 1958 is well below the floor now. Associate targets at large firms commonly run 1,900 to 2,400 hours a year. Rates followed. The average US lawyer billed $341 an hour in 2024 according to Clio's Legal Trends Report, and the top of the market bills past $3,000. The US legal services industry cleared $417.9 billion that year.
2002: the profession indicts its own model
In 2001 the ABA convened a Commission on Billable Hours, with Justice Stephen Breyer hosting its first meeting and writing the foreword to its report. The report, published in August 2002, listed the model's problems in plain language. Hourly billing “penalizes the efficient and productive lawyer” and “may allow, indeed may encourage, profligate work habits.” Breyer warned that the profession's obsession with hours was drowning young lawyers.
That is the governing body of the profession stating that its dominant pricing mechanism rewards slowness. The profession read the report and kept billing by the hour for another two decades.
The timeline in one table
| Year | What happened | What it changed |
|---|---|---|
| 1919 | Reginald Heber Smith becomes managing partner of Hale and Dorr and has lawyers keep daily timesheets in tenths of an hour. | Time is measured for the first time. The purpose is management, not billing. |
| 1940 | The ABA publishes Smith's method as Law Office Organization. | The timesheet spreads through the profession as office-management doctrine. |
| 1958 | The ABA Special Committee on Economics of Law Practice publishes The 1958 Lawyer and His 1938 Dollar. | Lawyers are urged to sell time in units. About 1,300 fee-earning hours a year is the working assumption. |
| 1975 | Goldfarb v. Virginia State Bar holds that bar minimum-fee schedules are price fixing under the Sherman Act. | Fixed-fee reference points vanish. The hourly rate becomes the default anchor. |
| Late 1970s | Hourly billing is dominant in corporate legal practice. | Hours worked become the measure of a lawyer's value inside the firm. |
| 2002 | The ABA Commission on Billable Hours reports, with a foreword by Justice Breyer. | The profession states on the record that the model penalizes efficiency. It keeps the model. |
| 2024 | Average US lawyer rate reaches $341 an hour. Industry revenue is $417.9 billion. | Associate targets run 1,900 to 2,400 hours. Six minutes is still the unit. |
Why it survived its own indictment
The hour did not last because lawyers are slow to change. It lasted because it solves a hard problem elegantly. It moves the risk of a matter running long onto the client, and it lets a firm price its work while knowing almost nothing about what that work costs to deliver. A fixed fee demands the opposite: you cannot quote a number for a matter until you know your cost to deliver it, and most firms have never measured the part of that cost that is not billable.
There is a second reason. Smith's timesheet gives a firm a six-minute-wide view of its lawyers and no view at all of the work around them. Intake, conflicts, pre-bill review, e-billing appeals, the chasing of signatures and forms: none of it is on a timesheet, because none of it was ever billable. The operational work surrounding every matter is the largest unmeasured cost in a firm precisely because the profession's only measurement instrument was built to point elsewhere.
What changes now
The contradiction the ABA named in 2002 has been livable because legal work could only compress so far. That constraint is going. When a firm can produce the same answer in a fraction of the time, an hourly model turns its best capability into a revenue cut, and a client who can see the compression will not keep paying for the old duration.
Two firms reach the same answer. The one that took longer bills more, and nobody in the room blinks. That has always been the strange part of the arrangement. It stops being sustainable the moment the gap between the two firms is wide enough for the client to notice.
The way out is not to abandon the hour overnight. It is to know what a matter costs well enough to price it on scope. That is an operations project before it is a pricing decision, and it starts with measuring the work the timesheet was never pointed at. If you want the mechanics rather than the history, our guide to billable hours covers increments, targets, and a calculator for what the gaps cost.
Sources
- WilmerHale, Slice of History: Reginald Heber Smith and the Birth of the Billable Hour (2010). Smith's 1919 appointment, the timesheets, and the “only contribution” quotation.
- Reginald Heber Smith, Law Office Organization, American Bar Association (1940). Four-part pamphlet publishing the method.
- ABA Special Committee on Economics of Law Practice, The 1958 Lawyer and His 1938 Dollar (1958). The 1,300 fee-earning hours estimate.
- Goldfarb v. Virginia State Bar, 421 U.S. 773 (decided June 16, 1975).
- ABA Commission on Billable Hours, Report 2001-2002 (August 2002), foreword by Justice Stephen Breyer.
- Clio, Legal Trends Report (2024 edition). Average hourly rate.
Do more with less
See Caddi in action
Tell us where to reach you and the calendar opens right here. In 30 minutes we'll show you how Caddi automates the back-office work that grows with your clients: built, run, and maintained for you.
Frequently asked questions
Who invented the billable hour?
Reginald Heber Smith, managing partner of Hale and Dorr in Boston from 1919, is credited with introducing lawyer timesheets. He used them to measure how the firm's time was spent, not to bill clients, and later wrote that his only contribution was setting the minimum entry at one-tenth of an hour. His method was published by the American Bar Association in 1940 as Law Office Organization.
When did lawyers start billing by the hour?
Hourly billing spread through the American legal profession in the late 1950s and 1960s and was the dominant pricing method by the late 1970s. The turning points were the ABA's 1958 pamphlet The 1958 Lawyer and His 1938 Dollar, which urged lawyers to record and sell their time, and the Supreme Court's 1975 decision in Goldfarb v. Virginia State Bar, which outlawed the bar minimum-fee schedules that had anchored fixed pricing.
Why is the billable hour divided into six-minute increments?
Because one-tenth of an hour is six minutes. Reginald Heber Smith chose tenths as the minimum timesheet entry around 1920 so that monthly totals could be added by hand without fractions. The convenience outlived its purpose: most firms still record time in tenths, so a two-minute call and a six-minute call bill identically.
What did the 1958 ABA pamphlet say about billable hours?
The 1958 Lawyer and His 1938 Dollar, prepared by the ABA Special Committee on Economics of Law Practice, argued that lawyers' real income had fallen and that the remedy was to sell services in units of time the way a factory sells output. It estimated a lawyer had only about 1,300 fee-earning hours a year, roughly five chargeable hours a day for 260 days, and urged firms to record time diligently.
Why did the billable hour replace fixed fees?
Three forces converged. Firms already had timesheets from Smith's management method, so the data existed. The ABA's 1958 pamphlet gave lawyers a reason to price on time. And in 1975 Goldfarb v. Virginia State Bar held that bar minimum-fee schedules were price fixing under the Sherman Act, removing the profession's shared fixed-fee reference points. Hourly rates became the default anchor that remained.
Has the ABA criticized the billable hour?
Yes. The ABA Commission on Billable Hours, with a foreword by Justice Stephen Breyer, reported in August 2002 that the hourly model penalizes the efficient and productive lawyer and may encourage profligate work habits. The profession kept using it. Associate targets that were suggested at 1,300 hours in 1958 now commonly run 1,900 to 2,400.