Minimizing Billing Adjustments
Here are a few of the most prevalent types of adjustments clients make to their legal bills. The obvious negative impact on the firm’s realization is only one of several adverse results. Another is the administrative time that partners and others spend attempting to justify disputed charges — time that could have otherwise been spent working on (and billing to) other matters or marketing the firm. Over time, of course, such billing violations can damage client relationships. Attorneys should therefore review and revise their own billing practices to prevent these adjustments from occurring in the first place, and ultimately, develop billing best practices.
- Block Billing, defined as combining two or more activities or tasks and billing them in one time entry, has been a perennial no-no. Clients dislike this because it is difficult, if not impossible, to determine whether the amount charged truly represents the time it took to complete all tasks. Rather than write, “Draft reply, discuss with client; revise draft”, split these items into three separate line items.
- Vague Billing Descriptions such as “Prepare for Smith deposition” doesn’t provide enough information for the client to determine whether the time charged was reasonable. Regardless of whether it’s a litigation, corporate or other type of matter, be as specific as possible without writing a novella. A more informative description would be: “Prepare for Smith deposition by drafting initial questions and ordering according to documents to be presented”.
- .1 Time Entries. Certain activities, like leaving a voicemail or even sending a quick email, will take less than six minutes, the minimum time increment one typically bills. Clients realize that most voicemail systems don’t accommodate six-minute messages, and as a practical matter, attorneys are not apt to leave long, detailed messages. One way to avoid the .1 time entry is to track small-time, similar activities separately, then combine them on a single line item. An example would be: “Leave 3 voicemails on 10/2, 10/8 and 10/14 for T. Duggan regarding Haney motion.” Yes, it takes more effort to track and organize these activities, but firm profits will not rise and fall on billing a .1 instead of a .3, and this demonstrates to clients that you are not “nickel and diming them”. Note also that this would not be considered block billing, since all three voicemails relate to the same issue.
- Using General Verbs. Entering 3.2 hours to “Review memo re: Janosco claim #1″ doesn’t really inform the client as to what the review included. Instead, use more action words, like “analyze”, “evaluate”, “assess”, and put them in context of what was actually done and the output from that action. Try this instead: “Analyze memo re: Janosco claim #1 for validity, outline possible defenses and identify case law and relevant precedents to support such defenses.” It is a bit longer, but it certainly lends more support to the time spent. Take the same approach when drafting or revising briefs, motions and other documents.
- Misalignment of Timekeeper with Task. Should a partner charge for document/file management, or should this be done by a paralegal or an administrative assistant? Beyond this rhetorical question, consider the roles and responsibilities assigned to the legal team and challenge whether the right people are performing the right tasks.
- Duplicate Billing. Does it take both a partner and an associate to attend a hearing, deposition or engage in another single activity together? In complex cases, perhaps. Otherwise, determine when less is more — particularly in the eyes of the client.
- Intra-Firm Communications. Somewhat related to duplicate billing, clients are increasingly skeptical of paying for two timekeepers discussing the same issue amongst themselves. Challenge whether the conversation involves a substantive issue that requires specific expertise, and even at that point, bill for only one timekeeper.
- Excessive Expenses. Does every piece of mail need to be expedited? Are you using the client’s preferred vendors for court reporters, reproduction and other services? How much does the client expect to pay for copies? Do they even expect to pay for copies? Any special expenses the client approves should be passed through and billed at cost, with no markup.
- Billing for Expenses or Activities That Are Really Firm Overhead. CLE (even if the content is specifically relevant to certain client issues), certain research (including client conflict research) and other items are part of firm overhead and should not be billed to the client.
- On-The-Job Training. Certainly, new associates need experience, but not at the client’s expense. If you assign a new associate to a case, bill only the expected time even if the person takes longer to complete it. Similarly, clients are increasingly wary of overstaffing.
Minimizing billing adjustments like the foregoing can increase realization and help optimize utilization (to the extent such adjustments were a result of staffing mix and affected timekeepers have other clients they can bill). When you institutionalize best billing practices, you have more confidence that each timekeeper is appropriately describing the value of each line item, and that every partner is more efficient in reviewing and finalizing bills prior to their issuance. Moreover, you are in a much better and more proactive position to navigate different billing guidelines, because you will have addressed their primary concerns through your existing billing protocols. Consistent billing practices is just one more example of process predictability that will serve the forward-looking law firm well into the future.