The Greatest American Lawyer has a neat discussion going over at his blog on this topic. Below is my comment. Suggest you click the link above though to get the full perspective.
The "History" of the billable hour might be of some interest and
help attorneys to understand why it seems that billing clients
by-the-hour when we are supposed to be their advocate & trusted
advisor seems like such a square peg in a round hole.
In point of fact, for more than a thousands years lawyers did NOT
bill by the hour. Instead it was always value based billing. Then in
the 1960's the insurance companies came along and hired efficiency
experts to reign-in their legal expenses. . .
If you're interested in learning "the rest of the story", send me an
email to firstname.lastname@example.org and I'll send the you the whole thing
back in an email. Complete with some pretty interesting citations.
Fascinating stuff. Really puts everything into perspective I think.
But for me, the worst thing about the billable hour is that it takes
all the fun out of the practice of law and causes lawyers to make LESS
money than they otherwise could with a properly-designed value/flat-fee
billing system. (Remember, before I was the Rainmaker I was a Practice
Management Advisor with The Florida Bar's Law Office Management