As law firms increasingly wrestle over pricing, billing, and value, one insurance defense litigation firm is pushing what it considers a better pricing model
Key insights:
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Capital and human resource drains — Managing the billable hour model is seen as wasting capital and time for both law firms and clients.
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The billable hour and talent retention — The billable hour may be contributing to a talent drain in litigation defense and other practices.
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Data may be the answer — One firm is pivoting to data-driven pricing based on key performance indicators (KPI), which it views as a win-win for both the firm and its clients.
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“The billable hour is a gigantic waste of time for everyone involved.” That is the blunt assessment of Kopka Law founding partner Bob Kopka. “It stifles innovation, penalizes efficiency, and has grown into a status quo that costs more than it benefits.”
The administrative-industrial complex
The primary target of Kopka’s critique is the massive administrative overhead required to manage the billable hour. On the client side of the firm’s work in defense litigation, insurance companies employ vast departments and third-party vendors specifically to review, audit, and cut legal bills. In response, law firms like Kopka have had to build their own payment departments to counter this, represented by teams of billers trained on dozens of different platforms and appeals departments dedicated to what Kopka describes as “chasing payments on appeals, most of which are both unfair and unsuccessful.”
This administrative-industrial complex, Kopka argues, creates a world in which lawyers spend as much time justifying their work and subsequent compensation as they do practicing the law.
“The time to set up new matters, add timekeepers, approve budgets as well as approve invoices, and cut separate checks for every matter is arduous,” notes Kopka Law COO Donna Markus. By moving to a monthly retainer or portfolio-based alternative billing model, Kopka Law aims to dismantle this bureaucracy, freeing up significant capital and human resources for both the firm and the client.
Killing the profession 6 minutes at a time
Perhaps the most provocative aspect of Kopka’s stance is the link between billing models and the legal industry’s talent crisis. The traditional model requires attorneys to feverishly capture every one-tenth of an hour, documenting their day into six-minute increments with hyper-specific narratives and present-tense verbs.
According to Markus, this isn’t just an annoyance; it’s an existential threat to the defense bar. “Talent is leaving the defense side because of the tedious nature of capturing their time,” she warns, adding that when a lawyer’s value is reduced to a billing code, the “most valuable time a lawyer can spend” — engaging in free thinking — is often treated as a non-compensable activity because it doesn’t fit into a standard billing code.
This administrative-industrial complex, Kopka argues, creates a world in which lawyers spend as much time justifying their work and subsequent compensation as they do practicing the law.
“We are professionals,” Kopka states. “Our performance should be reviewed and judged by our KPIs [key performance indicators], not on whether a billing entry ‘appears excessive’ or whether the attorney obtained permission to do a jury verdict search”.
Why the billable hour hates AI
Kopka and Markus also highlight a dangerous paradox in the modern legal market: The billable hour actively penalizes law firms and their lawyers for becoming more efficient. As AI increasingly automates routine legal tasks, firms that use AI to finish a task in 30 minutes that used to take three hours are effectively cutting their own revenue under the traditional model.
And as AI starts to replace some billable activities, many insurance clients are refusing to pay for software or AI costs while simultaneously expecting to reap the benefits of the efficiency and cost-savings that those tools provide.
Kopka sees alternative billing models as flipping this incentive. Under a well-constructed billing arrangement, a firm has every reason to invest in cutting-edge technology. If they can achieve the client’s desired outcomes faster and with fewer resources, they are rewarded for their efficiency rather than punished for it.
Data as the solution for the “inertia of fear”
If the benefits are so clear, why then has the rest of the industry been so slow to follow? Kopka and Markus attribute the delay to “inertia born of fear” — including the fear of being underpaid or simply not knowing how to measure value besides using the clock.
They argue that this fear is no longer justifiable because the data exists to solve it. “Fear not,” they insist. “We have metrics.” Between the insurance company’s data on frequency and severity and the firm’s own data on litigation categories, there is more than enough information to fashion a mutually beneficial pricing arrangement.
The Kopka model focuses on key performance indicators (KPIs), rather than simply time spent on a matter. These KPIs include:
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- cycle time and case disposition
- early evaluation and consistent communication
- indemnity outcomes relative to injury type
- strategic collaboration and value added
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Kopka believes this approach restores the firm-client relationship and moves it toward a true partnership. The law firm is finally treated as an independent contractor, rather than a legal services vendor that needs to be micro-managed. This gives the law firm the autonomy to focus on delivering legal services that achieve the client’s goals, instead of having to hold endless discussions about how the firm is managing itself as a business.
A call to action for the defense bar
Kopka Law sees its success with these models as a challenge to its peers. The firm uses the term alternative billing arrangements, arguing the legal industry’s attempts to use what are commonly called alternative fee arrangements (AFAs) actually focus on the wrong objectives. “AFAs are often designed solely to save the client money,” explains Markus. “They’re destined to fail because they potentially force the law firm to compromise or cut corners to meet a low-cost bar.”
Instead, Kopka aims for a win-win model that appropriately — and perhaps even generously, if structured and executed properly — compensates the law firm for excellent service and the achievement of specific, agreed-upon goals.
Kopka Law is actively encouraging other firms and insurance carriers to enter these negotiations. The firm sees it as a necessary evolution to stabilize budgets and make legal spend more predictable for clients.
For Kopka and Markus, the message is clear: The legal industry has the metrics and the tools to do better. And the better approach, they argue, is a firm-client partnership that’s driven by data, aligned incentives, and a commitment to results over activity. And with AI and advanced data analytics, that model is within reach for most law firms.
You can find more about how law firms are managing their billing and pricing issues here
