Billing Your Clients: Seven Deadly Sins
By Michael J. Ford 

Every law firm writes off time.  Some timekeepers, usually associates and paralegals, are concerned to find their time written off by billing attorneys.  In a perfect world, billing attorneys would counsel attorneys and paralegals whose time they have to write off. 

However, since we all don’t live in a perfect world all of the time, let me share with you some observations about why your time might get written off on occasion by a billing attorney.

I base these observations on my review of prebilling reports, in which I have noticed a number of recurring issues.  Timekeepers may wish to address these to improve the chances that their time records will survive the billing process, and that their time will get billed to, and paid by, a client. 

Sin #1 – Abbreviations in Bills
Avoid the use of abbreviations in your billing reports.  Instead of noting “conf MS re MSJ” try spelling it out: “Confer law firm paralegal Maggie Smith regarding documents to be assembled in support of our motion to dismiss the complaint.”

To avoid sin number one, first remember a bill is a form of communication with the client.  It is like a letter, or a legal brief. 

None of us would use abbreviations in a letter or a legal document.  Abbreviations cheapen the communication, in the eyes of both the one doing the abbreviating and the one reading it. 

As far as it contributes to the fiscal health of the law firm and the productivity of the timekeeper, a billing communication is one of the most important communications in the firm. 

Try to avoid abbreviations.

Sin #2 – Indecipherable Entries
Describe the activity that you want to get paid for in such a way as to make it understandable to a nonlawyer, the client. 

To avoid sin number two, look at your notes from the client’s perspective.  Consider the example above: “conf MS re MSJ.” No client will know “MS” is Maggie Smith without meeting her, and most clients won’t know what an MSJ is. 

Few know what a “motion” is, and many don’t appreciate the significance of the terms “summary judgment” or “Rule 56 motion,” much less acronyms that may substitute for these terms.

Why not interpret the legalese for the client so they can understand what you are talking about, as in “motion to dismiss the complaint”?

Sin #3 – Unpersuasive Billing
In order for the client to pay the bill, they need to come away from reviewing the bill with the firm conviction that the activity described was both necessary to the engagement and likely to bring the engagement to a successful conclusion. 

To avoid sin number three, use specific, descriptive language.  For example, does “Draft documents forwarding change of beneficiary and IRA forms to various providers” make you feel that the activity is worth $ 58.50 worth of paralegal time? 

How about “Prepare correspondence forwarding change of beneficiary and related IRA forms to Bremer Bank, U.S. Bank, Wells Fargo Bank and PrimeVest.”?  It is both more descriptive and tells a more compelling story that is more likely to be paid for by the client.   

Sin #4 – Ignoring the Internal Client
Except for attorneys in solo practice or in very small firms, few attorneys have full control over the billing of their time.  Typically there’s a “billing attorney” who reviews time records and approves billings.  Overlooking that attorney’s needs can be costly.

To avoid sin number four, consider creating an “internal bill” to the “internal client” who has to pay, or account, for your time. 

Billing attorneys review prebills at odd hours, often in the evening and on weekends, and may not have access to a computer or email when they are reviewing prebills.  As a result, if they run across a puzzling time sheet entry, their inclination is to write it off, or down, without taking the time to hunt up the timekeeper whose time is being reduced. 

If you have just finished a discrete project, e.g., a motion for summary judgment or preparation of trust documents, consider preparing a time report using your law firm’s practice management software.  If your firm does not have practice management software, prepare your report using your word processing program. 

Send that “internal bill” to the billing attorney, both as an email attachment and in hard copy (for those billing attorneys who don’t read electronic communications all that well). 

Ask in the email whether there are any time charges that need more explanation.  Stop by the billing attorney’s office several days after the “internal bill” has been delivered and solicit a verbal response to your email if a written one has not already been received. 

In other words, act like a lawyer who is interested in getting paid for his or her time. 

For associates, who all should hope to be billing attorneys some day, these will be excellent habits to develop in anticipation of the day when you are billing external clients. 

Sin #5 – Hiding Unbilled Time
There are some tasks that simply must be done but which aren’t obviously both necessary to the engagement and likely to bring the engagement to a successful conclusion.  For example, you may work for clients who refuse to pay for office conferences among counsel (a short-sighted position as such conferences if properly planned and executed can actually make the engagement more efficient).  

If you must write off such activity, do it in front of the client rather than behind the scenes. 

To avoid sin number 5, when entering time to document the file but without any intention to charge the client, use a “NO CHARGE” preface, e.g., “NO CHARGE — confer law firm attorney Fred Smith regarding steps needed to finalize the trust documents.”

Such a notation not only documents what effort you have put forth but also provides the client with a visual reminder of the fact that at least some of the effort was on a “no charge” basis. 

Sin #6 – Unclear Ground Rules
Billing and supervising attorneys often prefer to have time entered in certain ways and carry certain assumptions about what time is billable and what must be written off.  Work to get those expectations and assumptions on the table at the time a project is assigned; a lot of productive time can otherwise be wasted rewriting time reports at the time of the prebill. 

Better to get it right the first time than have to extensively review and revise a bill at the time the bill is being produced for presentation to the client. 

Sin #7 – Misjudging Costs
Attorneys and staff working on a project risk losing control over why their time is written off if they don’t anticipate and stay on top of the costs of a project as it unfolds.

One of the key reasons for write offs is a failure on the part of the assigning or billing attorney to recognize or appreciate the scope of the project assigned.  Just as an external client may have unrealistic expectations of the cost of a legal effort, so also the “internal client” may misjudge the true cost of a project if not kept informed by those working on it directly.

Both for their own sake and for that of the firm, project attorneys and paralegals have an obligation to educate their internal client — the billing attorney who assigned the project — of the true cost of the project. 

To avoid sin number seven, at the outset of the assignment gently, but firmly, insist on a target budget for the project.  If the assigning attorney doesn’t give you that budget, suggest a preliminary one yourself (“might I suggest a time budget of 40 hours for this summary judgment project?”).  Be prepared to negotiate that budget at the outset if you get internal client resistance.

Then, as the project unfolds, continue to educate the billing attorney with any revised estimates that you arrive at (“as this project has unfolded I have had to review many more documents than we originally discussed and, as a result, my original estimate of 40 hours looks like it will turn out to be 50 to 55 hours”).

After the project is completed, “bill” the billing attorney with a time sheet report and send that in both electronic and hard copy formats as outlined above.

Wait several days after billing the assigning attorney and then call or stop by and ask if the timesheet descriptions, and overall charge, are acceptable. 

Following this procedure should inoculate your time for this project from substantial, or any, revision at the time the file is billed.

Conclusion
The foregoing “Seven Deadly Sins When Billing a Client” can lead to a substantial loss of the economic value of a law firm’s work.  In addition to the loss of revenue there can be corresponding dissatisfaction on the part of clients who get indecipherable bills that they naturally, and rightly, resist paying. 

Tell the client what you will do for them. 

Do it. 

And then accurately bill for it. 

Try it!  You and your clients will like it. 

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MICHAEL J. FORD is a member of the Board and an Officer of Quinlivan & Hughes, P.A., in St. Cloud, Minnesota.  He serves as treasurer of the MSBA and is expected to take office as MSBA president in 2008.