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.

  1. 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.
  2. 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”.
  3. .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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.