I was certainly wrong in asserting that there were "no problems", but it is still the case that they predominantly charge by the hour. I agree that the incentive is to work smarter, not harder, as with most white-collar professions...

Surely the fact that the legal profession uses (begrudgingly or not) hours as a proxy for work (whether or not they actually work X hours, or who at the firm works those X hours) means something. The legal profession seems similar enough to ours (as far as this issue is concerned at least) and has been around long enough that they should have adopted a better way of doing things by now.