While attorneys can use various billing increments, the most common are:
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A best practice is to make your bills as clear and accurate as possible. If you’re billing by the hour, provide clear, detailed notes on work performed. If you’re billing via fixed fee or contingency, ensure you’ve got solid reasoning as to why your fees are reasonable.
Hourly billing is the most common billing method used by attorneys. In an hourly billing situation, you should ask what intervals of time the attorney bills in. The common way to break down the hourly rate for billing is to use tenths of an hour (each 1/10 is a 6 minute interval), or quarters of an hour (each ¼ is a 15 minute interval).
Give us a call at 1-888-858-2546. Billing is critical to the success of your law firm. And yet law firm billing, including billing clients and chasing down payments, can be one of the most time-consuming, repetitive, and dreaded parts of any lawyer’s day.
Heart of America Mgmt. Co., 1999 WL 540895 at *7, fn 8 (D. Kan 1999) (quarter hour billing... has been virtually extinct for some time"). Yet it appears that anywhere from five to ten percent of lawyers bill clients in unacceptably large chunks of time - usually in one hour or half-hour increments.
These are the most common types of fee arrangements used by attorneys:Fixed fee or standard fee. Commonly used for routine legal matters, such as preparing a simple will. ... Hourly fee, which will can vary among lawyers. ... Retainer fee. ... Contingency fee. ... Statutory fee.
A sample billable hours chart For example, if you worked for 15 minutes at a rate of $100 per hour, you could use the chart to see that the time increment is 0.3. So, 0.3 x $100 = $30 to bill. You can also use a billable hours calculator to help expedite the process.
During the New Client Consultation, Every Lawyer Should…Be Clear about Any Consultation Fees. ... Introduce the Firm and Working Attorneys' Experience as Is Relevant to the Case. ... Be Attentive. ... Showcase Knowledge and Know-How. ... Engage with Specifics. ... Discuss the Process.More items...•
How to increase billable hoursBunch queries together. ... Remove distractions and tackle procrastination. ... Track billable time in real-time. ... Delegate non-billable tasks. ... Track non-billable hours. ... Track all the billable hours. ... Completing billing descriptions.
The billable hour system is when a lawyer records how they spend every minute of their working day to calculate how they bill the client. It used to be the most common method of charging a client for the work of a lawyer.
As a general rule, if you bill between 36 and 40 hours in a week, you're likely going to be okay. Over the long run, the expectation is that you should be averaging 40 billable hours a week - assuming you have productive work to do.
legal consultationA legal consultation is the initial meeting between a potential lawyer and client. These meetings allow the client to discuss their case with an attorney. Then, the attorney can give an overview of their recommended course of action.
A typical consultation will last from one to two hours. Depending on the facts of your case and how long it takes you to disclose everything, you should prepare for a longer session, as it may take the attorney some time to go over all of your options with you.
1. How do lawyers introduce themselves? Lawyers typically introduce themselves by stating their name, firm, and area of practice. For example, “My name is Jane Smith and I'm a lawyer with the law firm of Smith & Associates.
Billable hours include all the time an attorney spends actually working on a matter or even thinking about a matter. It doesn't matter where you do your thinking, either. Non-billable hours are hours that a law firm's client should not pay for.
Billable hours represent the amount of time employees have spent on tasks that are invoiced to clients. Non-billable hours are the hours spent on tasks that don't get invoiced. They are most often dedicated to different internal tasks.
Tips for Reducing Non-Billable HoursDetermine what's billable and what's not. ... Use automatic time tracking software. ... Track the time you spend completing tasks on your phone. ... Manually add whatever you can't track. ... Set clear rules on billable activities. ... Review your reports regularly. ... Optimize your non-billable hours.More items...•
3 unitsA billable unit for a 30-minute increment code is 16-45 minutes or any multiple of this time range: 16 – 45 minutes equals 1 unit. 46 – 75 minutes equals 2 units. 76 – 105 minutes equals 3 units.
Avoid excessive rounding Businesses that use billable hours charts are more likely to round their billable time much more reasonably. For example, without a billable hours chart, professionals might round a seven-minute meeting up to 15 minutes.
2080 billable hoursIf you do the math, 260 days x 8 hours per day = 2080 billable hours in a year.
Billable hours represent the amount of time employees have spent on tasks that are invoiced to clients. Non-billable hours are the hours spent on tasks that don't get invoiced. They are most often dedicated to different internal tasks.
The “hourly rate” is the amount an attorney charges on an hourly basis to perform work for the client. Hourly billing is the most common billing method used by attorneys. In an hourly billing situation, you should ask what intervals of time the attorney bills in.
A “retainer” is an amount of money paid by a client toward legal fees. Like a down payment, it is paid at the beginning of the attorney’s representation, usually when the attorney is billing on an hourly basis. The total services and costs are subtracted from the “retainer,” against which further work will be performed.
Attorneys must earn their living by billing clients for the advice they give and for their expertise in dealing with the complex legal field. Clients often have no idea how attorneys bill, and they may not understand the bills once they receive them.
Many attorneys record their time by computer entries, and the bill which is generated and sent to the client is a summary. If you want an itemization of your bill, call the attorney’s office and request it.
The other method of billing is the “contingent fee arrangement.” Put simply, the attorney’s fee is contingent upon winning the case. This arrangement is used primarily for personal injury cases.
For some legal services, the attorney may be able to quote a “flat fee” – a single, onetime charge. The type of fee arrangement usually applies to a preparation of a deed, or a Will, or one court appearance. The other method of billing is the “contingent fee arrangement.”.
The common way to break down the hourly rate for billing is to use tenths of an hour (each 1/10 is a 6 minute interval), or quarters of an hour (each ¼ is a 15 minute interval).
LEDES, or Legal Electronic Data Exchange Standard, is a standard format for electronic legal billing that uses specific format guidelines. It makes it easier for large organizations to handle large amounts of files and data, and assess invoices, as all they will all be coded in the same format.
These should include when to send invoices, how long descriptions should be, what types of expenses must be included on bills and what should be written off, and any standard introductory communications on bills, if needed. 2. Write out the flow of your law firm’s billing process.
Billing is critical to the success of your law firm. And yet, for many law firms, billing clients and chasing down payments can still be one of the most time-consuming, repetitive, and dreaded parts of the job.
With the right system, you can send out bills and reminders quickly, so there’s no reason to put off billing your clients. Sending out smaller bills consistently can lower the shock of a large unexpected bill. Plus, there’s the added benefit of encouraging a smoother cash flow for your firm.
The Billing History Report provides a detailed view of open receivables, past-due receivables, and paid invoices. This provides a complete history of your clients’ invoicing.
To keep your billing process on track, you should keep a close eye on outstanding balances, payments, and revenues. The following reports can help you monitor your law firm’s financial health and keep your billing process running smoothly:
Separate from descriptions, billing codes convey—at a high level—which activities or expenses a client is being billed for.
Double billing is simultaneously billing two clients for work performed during the same block of time. The temptation to do this occurs most often when lawyers travel. Say the lawyer spends two hours flying to attend Client 1’s deposition. While the lawyer is on the plane, she uses that time to work on projects for Client 2. Some clients don’t allow lawyers to bill for travel time, and under that circumstance, the lawyer could only bill the time spent working for Client 2 anyway. But when clients will pay for travel costs, the lawyer may be tempted to bill Client 1 for the time spent traveling and simultaneously bill Client 2 for work on their projects. Voilà—the lawyer has magically made four hours of billable time out of two hours. While none of the comments to Rule 1.5 or Rule 8.4 explicitly address double billing, legal ethics experts agree that double-billing violates these rules.
Marking up time also violates lawyer ethics rules. Suppose a lawyer prepares a brief on an issue the lawyer has dealt with many times before. The lawyer performed the research, wrote a brief about the issue on a prior matter, and billed those tasks to that client. In the new matter, the lawyer copies the memo, makes sure the research is up to date, tailors the arguments to the current client’s case, and files the brief. He spends two hours on the task but knows that if he had to start from scratch, he would need four hours to complete it, so he bills the client for four hours. Like double billing, marking up time also violates the professionalism rules.
Some firms require that lawyers enter their billable time daily or weekly, though bills usually go out monthly. Even if your firm doesn’t require you to enter time daily, this is the best approach to ensure you capture all the billable work you perform. Any lawyer will tell you that this is easier said than done, but I promise that you will lose time if you put it off, especially as a young lawyer. You’ll forget about emails you sent, phone calls you took, and other “small ticket” items that add up over a month. This hurts the firm and your progress toward your billable-hour goal.
Don’t short yourself that billable time. But be realistic about how many hours you can bill in a day. Not everything lawyers do is billable; an 11-hour day at the office might only yield eight billable hours. And that is OK.
You need to know what you can and can’t bill for so you can avoid both spending excessive time on work that clients won’t pay for and entering time for unbillable tasks.
You’ll get more proficient at both, but it will take a few years, and during that period, expect that your billing entries may be cut. Unless someone told you otherwise, bill all the time you spend on a task, even if you know some of it will be marked down.
But at most firms, you can and should bill for tasks like reading and sending emails; taking and making phone calls; reviewing accident reports, medical records, and discovery documents; and speaking to clients, opposing counsel, and witnesses.
Retainers can be more complicated. Typically, a retainer is lump sum you will pay up front from which the lawyer will deduct his or her hourly expenses. Often, your retainer reserves a certain amount of hours or services from your lawyer as well helping solidify the case-long relationship of the attorney and you, the client. There are many different kinds of retainers as well as different pay schedules, so make certain you understand your agreement up front.
A contingent fee—sometimes referred to as working on "contingency" —means that your attorney will take a certain percentage of monetary settlements and damages you receive from your case. Contingent fees are typically charged in civil suits, such as medical malpractice and personal injury litigation.
Some attorneys charge by the hour. Although the actual rate varies dramatically depending on location, experience, and case type, it's important to note that you will not only pay for the hours your lawyer spends in court, but the time he or she spends researching, writing motions, meeting with opposing counsel, reviewing discovery, etc.
For example, a lawyer cannot charge you contingent fees if you're being charged in a criminal case, as you will not be awarded damages. Whichever fee agreement you select, make sure you understand it up front and get the parameters in writing.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
They are basically a set of “do’s-and-don’ts” for what the outside attorneys can and cannot bill for when they handle a lawsuit for a big corporation. However, since this is a small law firm, we don’t have anything that formal here.
A: Yes, in tenths-of-an-hour, or every 6 minutes. If a task takes 6 minutes or less, we bill 1/10th of an hour for that. If it takes 7 - 12 minutes, it’s 2/10th’s of an hour, and so forth. We always round up. We also describe the purpose or subject matter of each task in our billing entries, so you can see how and why the work related to your case. We also bill in single-task format, so you can see the amount of time we actually spent on each task in the legal bill. We give you that breakdown.
A: No, although you’d be surprised how much time is involved in doing that. First, all of the attorneys working on your case keep track of their hours either on written daily timesheets or by inputting their time directly into their computers each day. Our accounting department collects all that time, and then prints out a preliminary, draft legal bill called a “pre-bill” or “work-in-process.” I review that pre-bill to make sure there are no errors. If I have questions about an attorney’s time charges on the pre-bill, I ask them to explain. Then the finalized pre-bill gets turned into the legal bill that is sent to you. I don’t bill for any of that time.
A: Yes, if I think a paralegal can handle a task well enough, I’ll delegate it to them instead of an associate. Paralegals have the lowest hourly rates in our law firm.
A: Yes, by making sure there is a clear division of labor among all the attorneys on the case. The courts say it’s okay for more than one attorney to work on a case, so long as they aren’t duplicating one another’s efforts by overlapping and re-doing each other’s work.
A: We’ll get your approval first. We’ll also get a budget estimate from them in advance, and show it to you.
A: We charge for all necessary costs and expenses, with a few exceptions. For example, although we reserve the right to charge you for word processing in our written attorney retainer agreement, as a practical matter we don’t, except in unusual circumstances. That’s secretarial work. I even word-process many documents myself on my own computer, but I only charge you the legal fees for my time. I don’t add a separate word processing charge on top of that.
A written contract prevents misunderstandings because the client has a chance to review what the attorney believes to be their agreement.
Attorney fees and costs are one of the biggest concerns when hiring legal representation. Understanding how attorneys charge and determining what a good rate is can be confusing.
Some common legal fees and costs that are virtually inescapable include: 1 Cost of serving a lawsuit on an opposing party; 2 Cost of filing lawsuit with court; 3 Cost of filing required paperwork, like articles forming a business, with the state; 4 State or local licensing fees; 5 Trademark or copyright filing fees; and 6 Court report and space rental costs for depositions.
Factors considered in determining whether the fees are reasonable include: The attorney’s experience and education; The typical attorney fee in the area for the same services; The complexity of the case; The attorney’s reputation; The type of fee arrangement – whether it is fixed or contingent;
The first step to resolving these disputes is communication . If there is a disagreement, clients and attorneys should first seek to discuss it and try to reach a mutually agreeable solution. Often, small disagreements balloon merely because both the attorney and the client avoided talking to the other out of fear.
Hourly rates have traditionally been the most common legal fee arrangement. However, as technology changes and the practice of law evolves, it is more common to see “non-traditional” fee arrangements like flat-fee packages.
Attorneys usually bill in 1/10 th of an hour increments, meaning you will be charged 1/10 th of the hourly rate for every 6 minutes the attorney spends on your case. The most common billing frequency is monthly, however, some attorneys will send bills more frequently, others less frequently.
In order to minimize billable hour inflation, every client should implement outside counsel guidelines that prohibit block billing, billable "hoarding" and excessive incremental billing. However, these are just a few of the practices that lead to overbilling and should cause clients to carefully scrutinize their monthly statements. Please visit our website (www.litigationlimited.com) to learn more about these and other types of law firm overbilling, and the strategies clients can use to help outside counsel improve billing practices and rein in billable hour inflation.
When the economy slows down and billable hours are at a premium, work tends to be retained and billed by more expensive senior attorneys. This results in partners doing associate work, associates doing paralegal work, and paralegals doing secretarial work.
Law firm overbilling - whether described as the euphemistic "bill padding" or simply "billing fraud" - is a serious problem that is seldom discussed and even less frequently addressed. But rare is the legal bill that does not include at least some "padding." In fact, according to the California State Bar, most bills are inflated at least 10-30 percent. This article describes three common ways legal bills are inflated and provides tips to help clients identify problematic billing practices.
Approximately 90 percent of law firm clients who are billed on an hourly basis are “block billed.” Block billing is an accounting technique whereby lawyers aggregate multiple smaller tasks into a single "block" entry, for which a single time value is assigned. In theory, the total time charged equals the sum of the duration of each discrete task. For example, after spending five minutes on a phone call, 35 minutes revising a junior associate’s draft motion and three minutes dashing off a brief e-mail to the client, the attorney should bill the client for seven-tenths of an hour. Unfortunately, in far too many cases, the final block-billed entry for these tasks will end up looking something like this:
Another court observed that block billing allows lawyers to "claim compensation for rather minor tasks which, if reported individually, would not be compensable" and precludes the client "from determining whether individual tasks were expeditiously performed within a reasonable period of time because it is impossible to separate into components the services which have been lumped together." In re Leonard Jed Company, 103 B.R. 706 (Bankr. D. Md. 1989).
When lawyers bill by the hour, they should never use increments greater than one-tenth of an hour. Glover v. Heart of America Mgmt. Co., 1999 WL 540895 at *7, fn 8 (D. Kan 1999) (quarter hour billing... has been virtually extinct for some time"). Yet it appears that anywhere from five to ten percent of lawyers bill clients in unacceptably large chunks of time - usually in one hour or half-hour increments. This is neither honest nor reasonable, and constitutes outright billing fraud, as courts have held that “professional persons who charge their clients fees in excess of $80.00 per hour, based upon time spent, cannot, in all honesty and reasonableness, charge their clients for increments in excess of one tenth of an hour.” In re Tom Carter Enterprises, Inc., 55 B.R. 548, 549 (Bankr. C.D. Cal. 1985). By way of illustration, consider these billing entries from a $750 per hour partner:
Now consider that, at least according to the California State Bar and nearly every state and federal court in the country, most lawyers' daily time submissions contain anywhere from thirty minutes to three hours of time billed to clients that was not actually worked.
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While a junior attorney is probably not creating the bill himself or herself, that attorney is inputting the time entries that will eventually show up on the bill. Oftentimes, senior attorneys do not give clear guidelines on what tasks can and cannot be billed, either out of a mistaken belief that this is common sense, a desire to not have associates err on the side of under-billing, or a confusion over the proper approach themselves.
One of the more confusing questions that junior lawyers (and many senior lawyers for that matter) deal with is the issue of what they can and cannot bill for on a legal invoice. While a junior attorney is probably not creating the bill himself or herself, that attorney is inputting the time entries that will eventually show up on the bill.