Q. Bill, I’ve been in solo practice for five years, and I still have problems billing clients for the work I do. Sometimes I feel like Iam billing them based on what I think they can afford rather than on the time and effort I put into their cases. It’s even worse when I do work for friends. Sometimes I don’t even send a bill and end up working for free. How can I improve things?
A. You’re not alone in having difficulty sending bills, especially to friends and family. It’s hard to ask people for money. That was one of the reasons that I switched to a contingent-fee basis in my personal injury practice.
I asked one of the experts on small firm practice, Santa Monica lawyer and best-selling author Jay Foonberg, for his thoughts on your situation. He says that the first thing you need to know is how much time you are putting in on every case. To know that, you need to keep an accurate and complete record of how you spend your time every day. As Jay points out, one of the things that lawyers enjoy about being in solo practice is that no one else reviews your time records and billings. That, however, makes it easy to slip into the habit of not keeping time records.
The way Jay puts it is simply, “If you didn’t write down the time, you’ve given it away.” Or, “If you can’t figure out what happened during the day, you’ve worked for free.” Before you can offer your time at a discount, or at no charge, you need to know how much time you are working.
Once you have an accurate accounting of how you have spent your time each day and how much time you have spent on a particular matter, you can then decide how much of that time will be billed and how much will be given away or billed at a discounted rate. Jay suggests sending a bill for the entire amount of time spent on a case times your hourly billing rate and then including a line called “family discount” or “professional discount,” followed by the amount that you expect the client to pay to you. One advantage of this type of billing is that if your client refers someone to you, your client will be able to tell the referral what your regular billing rate is and the new client will expect a bill for that amount.
According to Jay, the biggest mistake you can make is not sending a bill at all, even if you decide not to charge anything for your work. You may think that by not sending a bill, your client will assume that the work was done for no charge and that you intended it to be free. Jay says that if clients don’t receive a bill, they will probably think that you simply forgot to send it and be hesitant to call you again for fear that you will discover your oversight. Instead, you should send a bill that shows the total bill and total discount, even if the result is zero.
Two good things will happen once you start keeping accurate time records: One is that you will know exactly how many hours you are working, and the other is that you will be able to decide in advance whether to give away your time. Jay also suggests keeping a photo of your family on your desk to remind you where your priorities lie whenever you are tempted to give away too much of your time.
K. William Gibson ( email@example.com) is a personal injury lawyer and arbitrator in Clackamas, OR. He is the author of How to Build and Manage a Personal Injury Practice (ABA, 1997).
firstname.lastname@example.org is the co-author, with J. Harris Morgan, of the recently released book How to Draft Bills Clients Rush to Pay, Second Edition (ABA 2003).