I don't think it is just the billable hour, it just happens to be the easiest thing to point to as a "barrier" or "cause" for inefficiency. I'd wager there are a number of inefficiencies. As you point out, if it takes 3,000 hours to bill 2,000, there is something off somewhere. Could be processes (more than likely, non-existent processes as no one has bothered to document them), systems, culture...any number of things. In that respect, law firms are not that much different from corporations. But unlike corporations, law firms also have to contend with the inefficiency of law, and its slow adoption of technology and innovation.

Is it the billable hour, or all the other inefficiencies that are taking up time besides the billable hour. If it takes 3,000 hours to bill 2,000 hours, what key things are driving the disparity?

Paul, I'm going to go out on a limb here suggest the billable hour to be the greatest (or one of) barrier to a firm creating the correct work/life balance.

Wondering what is the greatest barrier to a firm creating the correct work life balance environment???

Ah yes. Work/life balance. One of those common challenges, meaning it is challenging regardless of profession. For me, I think finding a separate work space is going to be key.