This article won the BigLaw Pick of the Week Award by Technolawyer.com. For details, see http://blog.technolawyer.com/2014/06/ethical-billing-practices.html .
The single most important document in Big Law is the (much dreaded) Time Sheet. It is Big Law’s invoice. Without an invoice, there is no revenue; with no revenue, there is no Big Law. Although I never quite understood why lawyers bill by the hour (a subject I will take on in a future post), it is — without question — the most prevalent billing system in Big Law.
Every day, lawyers record the work they perform in six minute increments. At the end of the month, Big Law turns time sheets into bills and invoices the clients. Although it sounds like a simple enough process, it is the bane of most lawyers’ existence. Accurate time keeping, in the required six minute increments, needs dedication, discipline, and organization. What if you are too busy and don’t have time to record each of the tasks you performed? Can you record your time at the end of each week or month (instead of at the end of each day)? What if some of the tasks take four or seven (instead of six) minutes? Do you still bill six minutes for them? What if the task took what you think is an unreasonably long time to perform? What if you had an inexplicably inefficient day? What if you ended up spinning your wheels on a project because you are inexperienced or because you simply made a mistake? Do you record the time it actually took to perform the work, or do you record the time it should have taken?
How to record your time properly, accurately (and ethically) is the subject of some debate. Here are some dos and don’ts for successful time keeping:
1. DO record your time promptly. With each time entry, you represent that you have accurately recorded the time you spent on each listed task. If you do not record your time promptly, you risk recording it inaccurately. While recording your time at the end of each day is reasonable, it is better to record it immediately after you complete each task when the description and time you spent are fresh in your mind.
2. DO craft billing entries that sufficiently explain what you did. Your clients will read your billing entries and decide whether to pay the bill. Do not give them a reason to question your bills.
3. DO spellcheck and proofread. When clients agree to pay Big Law’s extremely high hourly rates, they expect excellence. Spelling errors in the bill do not demonstrate excellence.
4. DO NOT bill time for mundane administrative tasks. Clients retain Big Law to help them solve complex legal problems. In doing so, lawyers will inevitably have to perform some administrative work, but clients do not expect to pay hundreds of dollars for those tasks. When your hourly rate is $600, for instance, clients don’t want to pay $480 for your time to “collate documents (0.3); and review hearing binder to ensure all copies are included (0.5).” Either ask a legal assistant to perform these administrative tasks or accept that you cannot directly get paid for performing them yourself.
5. DO NOT bill time for billing time. Although this should be obvious, surprisingly some lawyers have a question about that.
6. DO NOT misspell the client’s name. Although it is easy to miss the correct spelling of someone else’s name, people always spot any error in their own names. Always double-check the spelling of the client’s name.
7. DO NOT pad your hours. Need I say more? Billing 580 hours out of the approximately 840 hours between Thanksgiving and New Year’s is simply absurd (not to mention untrue). Bad things happen to lawyers who pad their hours.
8. DO become familiar with each client’s billing policies. Some clients require task billing; others require specific codes to be included; yet others require advance authorization for incurring fees or costs beyond a certain amount. Always know in advance, and never run afoul of, each client’s specific billing policies to avoid misunderstandings.
9. DO use common sense. Although you should always record your time accurately, don’t forget to use common sense. If you know you were inefficient, for whatever reason, ask yourself whether it makes sense for the client to pay for your inefficiency. Similarly, when you spend less than a minute on a call, ask yourself whether it makes sense to bill the client for six minutes.
10. DO use proper English. Big Law bills are usually reviewed by the specific in-house counsel assigned to your file. Often, however, the bills also end up being reviewed by others such as the court or outside auditors, other lawyers or even opposing counsel (in cases of the recovery of attorneys’ fees). For that reason, use proper sentences and do not use abbreviations. Make the billing entries as clear as possible to facilitate payment.
Whether you agree or disagree with the billable hour system (and that is the subject of a different post), record your time accurately every six minutes. No matter how brilliant you may be, if Big Law cannot bill (and collect on) your time, you provide no value. And who wants to be valueless?Follow questionbiglaw