Getting paid for your legal services in a timely fashion begins with a well-drafted bill.
In a recent ABA Law Practice magazine article, “Getting Paid, Ethically: Five Tips You Should Know,” lawyer Lynda C. Shely shares advice on crafting the kind of bills that can improve your bottom line.
Shely, who is president of the Association of Professional Responsibility Lawyers, says that incorporating these risk management and ethics suggestions will help create bills that clients can understand – not only improving your relationship with those clients, but also helping you get paid faster.
- “Every client, including pro bono clients, should have a written engagement letter,” says Shely, emphasizing the document’s importance, even if your jurisdiction’s rules do not require such agreements.
Shely points out that creating a written agreement and going over it at the start of the representation helps clients understand the firm’s billing procedures, fee calculation and scope of the representation. The result? “An informed client is less likely to complain,” she says.
- “Encourage time keepers to record time contemporaneously,” Shely advises, noting studies that show that lawyers who do not record time entries the same day may lose as much as 25 percent of their billable time. Even if lawyers are billing on a flat-fee or contingent-fee basis, real-time timekeeping is a good idea.
“Contingent-fee cases frequently require court approval of fees, which will mean producing contemporaneous time records of the actual work performed,” Shely points out. And, if a flat-fee or contingent-fee client terminates the representation before completion of a matter, the lawyer must demonstrate the value of the work performed up to the termination.
- “Never block bill,” Shely warns, explaining that unless the client has authorized it, the practice is unethical in most jurisdictions and may result in court sanctions. Block billing involves grouping activities together without breaking out the time for each one.
“In its 2007 decision, Welch v. Metropolitan Life, the 9th Circuit is just one jurisdiction that has found block billing may inflate bills and makes it difficult for clients to ascertain the reasonableness of charges for a particular activity,” says Shely.
“Billing ethically is not just required by the American Bar Association’s Model Rule of Professional Conduct 1.5, but it also serves as a firm’s most effective way to regularly inform a client about the status of its legal matter and hopefully get the firm paid on a regular basis,” Shely concludes.
5 basic ethical requirements in billing
“Every year remind timekeepers about some basic ethics requirements in billing,” Shely advises. Here are five must-dos to note:
- Use complete sentences, including use of nouns, verbs and subjects. Also, never draft an entry that just says “TC client.”
- Do not double-bill time when traveling. If driving for client 1 and simultaneously talking on the phone to client 2, deduct the call time from the travel time charged to client 1.
- Be careful about imposing minimum billing increments of more than .2 for all tasks unless the minimum reasonably approximates the average time needed for such tasks.
- Clerical tasks, such as photocopying and delivery of documents, are not billable unless expressly authorized in advance by the client.
- Firm management should have policies in place to ensure:
- Originating lawyers review all pre-bills, including applying trust account balances.
- Invoices are sent at least monthly.
- Write-offs and no-charges of more than 5 percent on any bill are approved by management.
- Lawyers understand that taking something of value from a client in lieu of billing fees through the firm is both theft and an ethics violation.
- Costs and expenses are reviewed by the originating lawyers and require documentation to substantiate the expense.
For Shely’s full list of basic ethical requirements in billing, click here.