Timebilling in the Legal Environment

The difference between timekeeping and billing

  1. Timekeeping is the process of tracing how attorneys and legal assistants use their time.
  2. Timekeeping is part of the practice management process
  3. We track time, client, work performed, expenses.
  4. Billing is the process of issuing invoices for the purpose of collecting monies for legal services performed and being reimbursed for expenses.

What are billable hours?

  1. Billable hours are hours and parts thereof which can be charged to clients through invoices.
  2. Legal Assistant were expected, according to a national survey in 1993, to bill 1,519 hours.

Principles of Timebilling

  1. All time should be tracked
  2. ISSUE Why should all time be tracked
  3. All time should be tracked by event and type

The History of Billing

  1. Billing was haphazard or barter
  2. Centralized process
  3. Billing cycle required manual timekeeping, sending of record to accounting, review, revision, resubmission, update of aging reports, new invoices generated and sent.

Computerized Billing

Timekeeping Practices

  1. Determine your annual billing requirement
  2. Budget the time on a regular basis
  3. Determine when timesheets are due.
  4. Keep copies of time sheets
  5. Record time contemporaneously
  6. Do not discount your own time - mention to supervisor if you think time spent is excessive (as office manager audit supervisees).
  7. Determine relation between billable hours and bonuses or promotions
  8. Always be ethical
  9. Manage your time carefully.
  10. Schedule events effectively- tell all supervisees to put all work of one type at certain time of the day in a group - eg phone calls

Types of Fee Arrangements New Jersey Rules Covering

  1. Hourly - standard hourly interval is 6 minutes or 1/10 hour.
  2. ISSUE how do you best round time spent to be fair to all parties.
  3. Flat Fee
  4. Contingency
  5. Mixed (as allowed by local Rules)
  6. Hourly by timekeeper
  7. Hourly by Client rate
  8. Activity Rate (by job performed - trial @ $200.00 an hours)
  9. Cash advance Retainer
  10. Pro Bono Publico
  11. ISSUE How should a firm decide what billing method to use. Should there be guidelines.

Retainer Agreement

  1. Retainer Agreements define the relationship between the client and the firm.
  2. Clauses in Retainer Agreements governing type of work: extent of work, rates of workers, costs, explanation of litigation process, disclaimer of result, choice of hourly or contingency (New Jersey Rules), arbitration clause (New Jersey has fee arbitration with its own set of rules)
  3. Retainer agreements govern and control the relationship between clients and firm. The Retainer is a legal contract and is binding. There are also other requirements
  4. Retainer agreements may be for GENERAL REPRESENTATION. This type of Retainer is generally used by corporations who need representation for many issues.
  5. Pure Retainer agreements (ROPER p.157) are not applicable in New Jersey. Although representation may be for a period of time, once engaged and pleadings are filed a firm may only be relieved of representation on motion for good cause shown.
  6. Prepaid legal services is an agreement by a firm or firms to provide legal services of some kind to participants who have paid a fee. Representation is usually free or at a greatly reduced rate.
  7. Value Billing is charging by the type of matter, complexity, and expertise of the timekeeper.

Fee Agreement Prescriptions and Prohibitions

  1. Fee Agreements must be in writing
  2. ISSUE - Should firms always have fee agreements?
  3. Contingency fee must be in writing.
  4. No Contingency Fees in Domestic Relations or Criminal matters
  5. Only Reasonable Fees can be collected - In NJ market forces by specialty determine fee structures: standard $150 - $175 for general practice by an experienced practitioner. $200 and above for specialty work (Domestic Relations)

Unethical and Highly Questionable Practices

  1. Charging twice the going rate for legal assistants
  2. Charging for legal assistants doing routine filing and general office work
  3. 12 hour work days
  4. Attorneys billing more than a 24 hour day
  5. Billing six times the number of hours worked.
  6. 348 hours preparation for a deposition

Fraud

  1. Billing for hours you haven't worked
  2. Criminal fraud is a false representation of a present or past fact made by the defendant upon which the victim relies resulting int he victim suffering damages.
  3. ISSUE: Everybody does it theory. How do you delicately avoid the problem.

What a Firm Cannot Bill

  1. General firm activities
  2. personal time
  3. pro bono

Leveraging the Hourly Billing

  1. Rule of Three (to be productive and worthwhile, an employee should bill three times her pay.
  2. Example of Rule of three : Salary x 3/ Annual billable hours (1/3 for salary, profit, and overhead
  3. An alternative method: Salary + Overhead + Profit/Billable Hours = Per hour