OSB Professional Liability Fund

Hard Times Don’t Call for Desperate Measures

women at desk with laptop and book
October 30, 2020
by Hong Dao

As business continues to dwindle for some law firms, they are laying off associates and staff, imposing pay cuts, and taking other measures to minimize the financial impact caused by the pandemic. The pressure to stay afloat may tempt lawyers to relax their billing practices, ramp up fee collection efforts, and even hoard billable hours. Working from home can also lead to careless billing practices as the line between work and family life begins to blur. Most serious of all, financial pressures may lead some lawyers to pad their billable hours – charging the clients for more than the time they actually spent on a task. Below are some examples of padding.

  • Rounding up time – Rounding up happens when a lawyer charges the client for a full hour when they actually spent less than that on the task.  So a 45-minute task is rounded up to 60 minutes. Some take more liberties in doing the math, so 1.5 hours of actual work is rounded up to 3 hours.
  • Guessing or making up hours – Lawyers who don’t keep track of their time with contemporaneous records often forget the exact hours and minutes it took to perform a task. So they end up guessing or making up the time.
  • Double-billing – In double-billing, lawyers do work for one client and use that work product for another client. Then they bill the two clients for the same work, even though they didn’t spend the same amount of time on each client’s matter.
  • Billing for lower-level work – This type of padding usually happens when lawyers do secretarial or paralegal work and bill at their usual attorney rate. In bigger firms, partners may do work typically performed by associates, associates may do paralegal work, and paralegals may do secretarial work. And they don’t discount their respective rates to reflect the type of work they are doing.
  • Billing for interruptions and breaks – In this type of padding, lawyers bill for the entire time they spend on a task, regardless of the interruptions or breaks they take while performing that task. For example, a lawyer starts at 9 a.m. on a billable task and finishes that task at 11 a.m. Within those three hours, the lawyer takes two 15-minute breaks and answers four phone calls. She still bills the client for the entire three hours. Lawyers working from home may experience even more interruptions from their family members than they would at the office.
  • Billing for the extra time it takes to complete a task because of working from home – The amenities and conveniences of a physical office setting make it easy for lawyers to complete many of their tasks. Those benefits are typically not available when lawyers are working from home, so it may take them longer to complete a task at home than it normally would at the office. Many lawyers bill for that extra time anyway.  
Billing and collection efforts may lead to a malpractice claim when the client disputes a fee and turns around to accuse the lawyer of negligence. And nothing prevents the client from also filing a bar complaint for possible ethics violations. In this time of uncertainty, lawyers need to be extra careful in their billing practices to avoid these problems.  The following tips can help lawyers engage in better billing practices.  
  • Enter time contemporaneously – To avoid overbilling (or even underbilling) clients, it’s best to track and enter time contemporaneously with the task. Recording time as you perform the task prevents the frantic search for emails you sent or documents you drafted to recreate a list of billable tasks. It also helps you accurately capture the actual time spent on tasks because you’re not relying solely on your memory. Lawyers who do not record time on a daily basis end up losing many billable hours, resulting in unethical or questionable billing practices like those described above.
  • Be accurate in capturing time – Only bill for the actual time you work. Your hourly rate should reflect the type of work you’re performing. This means that your rate may be lower when you’re charging the client for tasks normally performed by paralegals or secretaries.  Clients will appreciate your honesty when they know you’re not trying to rip them off.
  • Review statements before sending – Make sure you review all billing statements before sending them to clients. In addition to looking for errors, also review billing practices that may cause confusion to the client, such as block billing or vague entries (e.g., “research”). This process also provides an opportunity to reassess whether the charges reflect the value that clients receive from your work. If not, consider writing off some time. If you’re discounting your hourly rate as a promotion or a favor to the client, include your normal rate so the client can see the actual value of your service.
  • Use time-tracking and billing software – Using a software program will let you enter time contemporaneously so you don’t have to guess or try to recreate your time later. You can start an active timer in the program when you start a new task, and stop it when you have to do something else, like take a call or step away your desk for a break. Some time and billing software programs include:  Bill4Time, TimeSolv, and Time59. All major practice management software programs like Clio, MyCase, RocketMatter, Practice Panther, and CosmoLex also have a built-in time and billing software. There are more sophisticated software programs like Chrometa that record how long you spend on a document, email, website, and so on, and keep time for you based on your computer activities. The programs do this automatically, so you don’t have to use a timer or stopwatch.
These times can be hard for some lawyers. By sticking with good billing practices, lawyers can avoid further problems and focus on providing quality services for their clients.