March 01, 2015

TAPAs: Tick Tock: Tips on Time and Billing

Jeffrey Allen and Ashley Hallene

The need to master time and billing is about as certain as death and taxes for the solo or small firm attorney. Whether you are just starting out in your practice, or looking for ways to improve the efficiency of your practice, it is helpful to evaluate your time and billing habits and identify ways to improve them. Increasing your efficiency, even just a little bit, adds up quickly. Let’s say you bill at $200 an hour, and you capture an extra quarter of an hour every day (just 15 minutes) You gain $50 a day, $250 a week, a little over $1,000per month, and $13,000 a year—for just one timekeeper. If you have four attorneys at your firm, that amounts to $52,000 a year.

1. Write Out Your Policy for Capturing Time and Billing

Writing your policy down not only prompts you to clarify the policy, but it also creates a standard and an expectation for yourself and your employees. You can customize your policy to meet your needs. You may want to require everyone on your staff to account for hours, even the non-timekeepers. You may want to outline what you will or will not bill clients for. Having the policy written down also helps train new attorneys or employees as they come on board.

2. Track All of Your Time

This is a good idea especially if you are just starting out. Once you capture everything, you can categorize it as billable or not. Your nonbillable but traceable time may include categories like:

  • Firm administration
  • Firm marketing
  • Bar association activities
  • CLE

Your billable time can be categorized with descriptions like:

  • File review
  • Document prep
  • Document review
  • Trial prep

These, along with any other number of categories, should be accompanied with some further description so that when your client gets their bill, they have a better understanding of what it covers. For instance, rather than merely entering “Document Review,” you may want to enter “Document Review – Client’s Interrogatories.”

Another advantage to tracking all of your time is that it simplifies your routine. You do not have to evaluate at the end of each activity whether it is something you should account for. If you track everything, you can set realistic goals, identify the black holes that are sucking away your billable hours, and reallocate nonbillable routine tasks that may be better handled by support staff.

3. Identify a Time Recording Systems That Work and Use Them

If you or your staff member is not particularly comfortable with technology, then use manual logs. You can keep paper forms around and measure by start/stop time or have entries for time incurred in tenths of the hour, along with a few blank lines for a description of the matter and work performed. Manual systems are old fashioned, but they have the advantage of being simplistic. Because you will have to eventually put the manual entries in to some digital format in order to enter them into a bill, consider formatting your manual forms the way your bills appear, or set up your time keeping system to make adding the entries easier.

If you are comfortable with the technology, there are numerous time and billing software options out there to assist you. Some popular choices include:

  • Timeslips
  • Clio
  • Tabs3 Billing
  • Amicus Attorney
  • TurboLaw Time and Billing

The right one for you is somewhat subjective. It depends on whether you want mobile access, how many people will be using the software, whether the software synchronizes with any case management or financial management software you may use, how you prefer your bills to appear, and various other factors. If you do not have a system in place already, then we recommend you try a few out. Most of these systems will offer a free trial for you to sample the system and gauge whether it is a good fit for your firm.

4. Don’t Forget IOLTA Trust Accounting

If at all possible (and it is possible), you should integrate your trust accounting system and the system you use for billing. These two functions are heavily integrated in the legal world, and they should be integrated in your tracking system. You need to keep an individual ledger for each client so specific funds can be identified. Your client’s bill or invoice should include an accounting summary of your client’s trust funds if they have been applied.

5. Consider Alternative Billing Methods

There are more options out there then just your traditional hourly billing. Hourly billing is usually more comforting to the client because it equates the fees to the work performed, but it does not always equate to the value of services from the client’s perspective. Some alternative billing methods include:

  • Alternate or Flat Fee Billing
  • Contingent
  • Kickers

Clients generally prefer predictability in their bills whenever possible. There are no guarantees in law though (except maybe the aforementioned death and taxes.) If after the initial client interview, the matter seems fairly routine (a probate, for example) you may want to consider a flat fee arrangement. If you go this route, you should include contingencies in case the matter deviates down a complicated path, and outline what is covered by the fee arrangement in your engagement letter.

These are just a handful of tips to assist you in building the pillars of your law practice. Whichever route you choose, and however you structure your practice, you should give careful thought and planning to your time and billing strategy. The business of practicing law is not new, but the tools available are changing, so remember to reevaluate your strategy as your practice grows.

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Jeffrey Allen and Ashley Hallene

Jeffrey Allen is the principal in the Graves & Allen law firm in Oakland, California. A frequent speaker on technology topics, he is editor-in-chief of GPSolo magazine and GPSolo Technology eReport. Recently, he coauthored (with Ashley Hallene) Technology Solutions for Today's Lawyer and iPad for Lawyers: The Tools You Need at Your Fingertips. In addition to being licensed as an attorney in California, he has been admitted as a Solicitor of the Supreme Court of England and Wales. He holds faculty positions at California State University of the East Bay and the University of Phoenix. He may be reached at jallenlawtek@aol.com. You may also get updated technology information from his blog: jallenlawtekblog.com. Ashley Hallene is a petroleum landman at Alta Mesa Holdings, LP, and practices Oil and Gas law, Title Examination, Due Diligence, Acquisitions and Oil and Gas Leasing in Houston, Texas. She maintains a diverse solo practice on the side. Ashley is the coauthor of the technology overview Making Technology Work for You (A Guide for Solo and Small Firm Attorneys) along with attorney Jeffrey Allen. She has published articles on legal technology in GPSolo Magazine, GPSolo eReport, and the TechnoLawyer Newsletter.  Ashley is an active member of the American Bar Association’s General Practice Solo & Small Firm Division, ABA’s Young Lawyer Division, the Texas Young Lawyer’s Association, the Houston Young Lawyer’s Association, and the Houston Association of Petroleum Landmen. She frequently speaks in technology CLEs and is Deputy Editor-in-Chief of the Technology and Reviews Department of the GPSolo eReport.