Legal Billing - Dos and Don'ts
Rule 1. Keep different types of fee agreements (hourly billing, flat billing, contingency billing, etc.) ready at all time. Many local and state bar associations provide sample fee agreements. Start with those templates and make necessary changes according to your needs and jurisdictional requirements. You must specify every type of charges (travel, fax, telephone…) that you will be billing to your clients. If your jurisdiction requires it, disclose whether or not you carry malpractice insurance. State with particularity the tasks you will performing and expressly exclude the tasks that you will not be handling (e.g., any appeals). Review the rules of your jurisdiction from time to time and adjust your fee agreement templates accordingly.
Rule 2. Your fee agreement should include associate, paralegal and secretary rates, even if you don’t have any staff. See “Delegate Tasks” below.
Rule 3. It is advisable to include hourly rates of an outside counsel (preferably a specialist in the subject matter of the case) that you may need to hire from time to time to fill in for you or for performing specific and specialized tasks.
Rule 4. Mention in the fee agreement if you would be communicating with the client electronically and make them aware that email communication is not a secured communication method. Verify if the client is ok with receiving invoices via emails.
Rule 5. Remember, just because your fee agreement states that a retainer is non-refundable may not make the retainer non-refundable. If the retainer is deposited in client trust account and intended to be used for future services, the retainer is not likely to be non-refundable (regardless of what your fee agreement states). Understand the differences between true retainers and advance fee retainers. If you are seeking a true retainer, make sure your client understands this before retaining you.
Rule 6. If the fee agreement calls for a monthly (for example) invoicing, make sure it is complied with.
Rule 7. Keep the lowest billable time unit small. In some jurisdictions, anything more than “minimum 15 minute” is frowned upon.
Rule 8. Track time carefully. Also keep a record of the time that you do not intend to bill your client. It is preferable to invoice all time spent on the case and then offer a discount (for example, offer discounts to encourage prompt payment). This will also help you if a fee dispute arises and goes to arbitration/litigation.
Rule 9. Keep a good record of time spent on a case and record time as soon as possible. Record time spent on a case even if it is a contingency or flat fee case. If you have to separate from the contingency fee based case in the middle of the case, you will need these time records to claim quantum meruit compensation.
Rule 10. Keep a detailed account of the tasks for which you record billable and non-billable hours. (see Private Notes functionality in CaseFox Time and Billing Software for Lawyers). These detailed accounts will help you with managing the case too.
Rule 11. Avoid billing time for interoffice discussions. Clients hate this. Such discussions are considered preparatory steps (just like going to and from home to office) for dispensing legal services and should not be billed to clients.
Rule 12. Track time at a fine granularity of tasks so you can invoice them separately. This will save you if a fee dispute arises and goes into arbitration/litigation.
Rule 13. Each billing line item on an invoice should be brief but should clearly indicate the task performed (e.g., "Phone conf. with opp. counsel re: settlement”). Don’t be vague (e.g., “Legal services”).
Rule 14. Avoid using acronyms in billing line items that clients would not know. If necessary, add a note at the end of the invoice to describe the acronyms used in the invoice.
Rule 15. Avoid billing your clients for researching legal topics and theories that an attorney of your skills should already know.
Rule 16. Avoid billing more than a reasonable amount of time for tasks. For example, if another attorney (similarly qualified and experienced as you and charging the same hourly rates as you) would perform a task (such as writing a typical brief) in 5 hours, you should not bill 10 hours for the same task (even if you really spent 10 hours) unless you can explain why. If you do so, a fact finder (during fee arbitration/litigation) may get an impression that you are not as skilled as you represented to the client (hence should not be paid the hourly fees that you charged your client).
Rule 17. Don’t bill excessively for reviewing and revising the documents drafted by you yourself (or your associates).
Rule 18. Remember, client has hired you for your pre-existing legal skills in a particular area. Don’t bill excessively for training and skill development especially in your regular area of practice.
Rule 19. Don't bill a same task more than once. Check invoices carefully before sending them out to clients to catch such errors.
Rule 20. Don’t bill two clients for a same task. Apportion the billable time among multiple clients, if the task benefited them all. For example, if you research a legal topic that you will be using in two different cases, divide the billable time between the two cases.
Rule 21. Don’t inflate billable hours (this is highly unethical in every jurisdiction) even if a reasonable attorney would have performed the same task in the same time that you are planning to bill. For example, if you had already written a similar brief for some other case in the past and used the same template (with minor changes and adjustments), bill the time you really spent making those changes and adjustments.
Rule 22. Delegate tasks. Don’t try to do a task that a non-attorney staff or a junior attorney can do. Clients would hate to see $300/hr charges for making copies, going to court to file a motion or drafting/sending form letters. If you don’t have staff and do everything yourself, don’t bill attorney rates for such tasks. Rule of thumb is that if a task doesn't require your legal skills, you should not be billing that task at your hourly rate.
Rule 23. If your client is a corporate client, ask your client contact person about their invoicing practices and invoice them accordingly. Some corporate clients require invoices in LEDES format. If so, don't send them PDF or paper invoices.
Rule 24. Be frugal when spending money on behalf of your clients. Try to use the cheapest services unless there is a good reason not to.
Rule 25. Be fair, reasonable and use common sense. Please feel free to send us an email at support@casefox.com should you have questions related to client billing.
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