American Bar Association
General Practice, Solo, and Small Firm Division
The Compleat Lawyer
Winter 1998
© American Bar Association. All rights reserved.

Common Problems That Turn Up in an Audit

While the entire list of problems identified by one authority or another would be prohibitively long, certain problems crop up regularly in an audit. Sometimes, two or more problems may exist within the same bill entry, e.g., because there is both duplication of effort and the work was clerical in nature. Timekeepers who fail to break time down by task or mix various tasks risk disallowance of the entire entry. This list is not exhaustive, but elimination of these problems would save 90 percent or so of the law firms we review 90 percent of the problems they might encounter. Catching these problems before they leave the office should limit the impact of any audit and keep clients happier in the first place.

Issue Comment Examples Administrative or Overhead Time Time not properly billable to a client because not for professional services. Bill preparation, discussing billing issues with clients.Staffing discussions. Performing conflicts checks. Clerical Time Time billed for nonprofessional services, especially services that could be performed by nonbilling clerical personnel. Part of the firm's overhead. Photocopying, typing, faxing. Opening or closing files. Organizing or indexing documents. Preparing notebooks.Making routine calls to courts, clerks, government agencies. Chipping A project or task is broken down into numerous small tasks adding up to more time than the task should have taken. 0.2 to call office, 0.3 to write internal (multiple small entries) memo about call, 0.3 to call clerk,0.3 for confirming letter to clerk,0.2 to pull and attach exhibit to letter. Double Charge Possible double charge for time or expense, i.e., the same thing appears to have been entered twice on the bill. Two entries on same day for same timekeeper where general firm practice is to have one entry per day. Delegable Task An activity by a more senior timekeeper that could be delegated to a junior (cheaper) individual, making the charge inefficient or unnecessary. Lawyers digesting, summarizing, or indexing depositions. A senior lawyer performing legal research. Duplicative Time Two or more people doing the same task. 2+ timekeepers @ meeting.
2+ timekeepers @ deposition. Excessive Time Time for the stated task or activity appears excessive. May also be due to excessive repetition of the task. 0.8 for routine phone call.0.5 to prepare a cover letter. Questionable Expense Expense (out-of-pocket cost) item that is or may be questionable, e.g., because excessive,unnecessary,marked up, etc. Meals or other personal items. Photocopies @ 25¢/page. Faxes @ $1/page.Charges for books or clerical staff. High Hourly Rate Hourly or other rate appears high. Based on benchmarks, surveys, or experience. Internal Conference or Communication An internal, i.e., usually within the firm (or team), conference Includes internal meetings, telephone calls, or other communication. IC or internal conference with others in firm.TC or telephone conference with others in firm.Team meetings. Long Days Total time entries by timekeeper for that day exceed a reasonable amount, usually 8.0 hours. Even if the time was worked, value likely suffered. ABC bills 2.5 hours on five matters in same day. ABC bills 9.5 hours to "research and draft motion to dismiss." Mixed Time Entry Time entry contains mixture of tasks or activities, not all of which may be a problem or which may have multiple problems. (Sometimes so prevalent that virtually every entry would be flagged.) "Research legal issue; office conf. Jones re hearing." "Draft letter & call opponent." Note: Consequence is typically to flag the entire entry, even if parts would not be objectionable but cannot be segregated.* Nonprevailing Issue Where a party is entitled only to compensation for work on some aspects of matter, e.g., issues on which it prevailed, this entry relates to something else. Time spent on res judicata research, when that motion was lost. Time for "Jones deposition" when Jones was relevant to the unsuccessful affirmative defense. Off- or Over-Budget The fees (or some portion) are over the budgeted amount or were not provided for in the budget (i.e., off-budget). Once the lawyer gives an estimate, she has a duty to update the estimate. Firm provides a budget of $50,000 to handle the case, then bills $55,000. Firm budgets case, but provides no budget for discovery motions, then files one. Overstaffing Staff appears to be larger than necessary, causing unnecessary internal communication, etc. May also result in duplication, excessive time, etc. Two lawyers work on routine brief.One lawyer billing just 50 hours per month, yet second added to matter. Cryptic Entry An ambiguous, vague, illegible, or incomplete entry without sufficient detail to determine whether it is properly billable to this client and matter. "Conf. JWT (re?).""Research (re?).""Telephone call (re?, who?)." Rate Change Hourly or other rate changes. JWT bills at $105 in June, then $110 in July. Travel Time Time spent in transit, regardless of transportation mode. May depend upon whether local or not. JWT bills for time going to and from client meeting. JWT bills for entire day to fly to Chicago before deposition. Training Time Time spent training staff or lawyers; learning time. May also apply where second timekeeper's experience and role are limited, indicating on-the-job training. Especially common for junior Attend seminar, workshop, lecture, CLE.Prepare internal memos of limited use or value.Extensive review of basic literature.Sending unnecessary personnel to same event. lawyers, paralegals, or summer associates. Violates Billing Agreement, Client Instruction, or Other Standard The firm is acting contrary to a billing policy, ethical rule, procedural rule, or the client's instructions, for example. Client's engagement letter states that new staff must be approved, expenses over $1,000 pre-approved, or only one timekeeper to bill for each deposition. Wrong Bill or Client Entry appears to relate to another matter or client. Entry references names or events that are out of place,  e.g., "Smith deposition," when there was no Smith deposition in this matter. *Even though task-based billing is relatively new and not always required, preparing task-based bills will avoid problems in the long run. The ABA has also promulgated a set of standardized codes by which to describe services. ABA & ACCA, "Uniform Task-Based Management System: Litigation Code Set" (May 1995) (ABA Publication #5310129).

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