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The Legal Billing Group
  • The Legal Billing Group

The Importance of Ethical Legal Billing Practices

Updated: Feb 28

Billing is an essential aspect of any legal practice, yet it isn't often the focus of law school curriculums. As a result, many attorneys find themselves navigating the complexities of billing practices without proper guidance. Ensuring ethical billing practices is essential to maintaining the trust of clients and the integrity of the legal profession. In this article, we'll discuss key ethical considerations in legal billing, common pitfalls to avoid, and strategies for becoming a proficient and ethical biller.

Legal Billing Ethics: The Foundation

Two professional conduct rules govern legal billing practices: Model Rule 8.4 and Rule 1.5. Model Rule 8.4 and its state counterparts prohibit conduct involving misrepresentation, deceit, and fraud, including billing fraud. Rule 1.5 forbids lawyers from charging "unreasonable" fees or expenses. When combined, these rules prohibit two significant billing malpractices: double billing and marking up time.

Double Billing

Double billing occurs when an attorney simultaneously bills two clients for work performed during the same block of time. This is most commonly seen when lawyers travel for work. For example, a lawyer may spend two hours flying to attend a deposition for Client 1 and use that time to work on projects for Client 2. If the lawyer bills both clients for the time spent, they have effectively doubled their billable hours. Although neither Rule 1.5 nor Rule 8.4 explicitly address double billing, legal ethics experts agree that it violates these rules.

Marking Up Time

Marking up time is another unethical billing practice. This occurs when an attorney charges a client for more time than they actually spent on a task, based on the assumption that the task should have taken longer. For example, an attorney may prepare a brief on a familiar issue in two hours but bill the client for four hours, as they believe it would have taken that long had they started from scratch. Like double billing, marking up time is a violation of professional conduct rules.

Billing Rules: Know Your Firm and Client Policies

Billing practices can vary widely between firms and clients. It is crucial for attorneys to familiarize themselves with their firm's and clients' billing policies to ensure they bill ethically and accurately. Some clients may not pay for certain activities, such as intra-office conferences, lawyer travel time, or time spent on administrative tasks. By understanding what can and cannot be billed, attorneys can avoid wasting time on unbillable tasks and ensure they correctly account for billable work.

Time Entry Precision and Codes

Some firms or clients may require precise time entries or the use of billing codes that specify the types of tasks performed. Attorneys should learn these requirements early in their careers and adhere to them closely to avoid billing disputes or errors.

Becoming a Proficient and Ethical Biller: Time and Practice

Mastering the art of billing takes time and practice. Most seasoned attorneys recognize that young lawyers often struggle with billing accuracy and efficiency. It is common for new lawyers to not become comfortable with billing until they are third- or fourth-year associates. During this learning period, attorneys should expect some of their billed time to be reduced or written off entirely, sometimes as much as 10 to 20 percent.

Billing All Time Spent on Tasks

Attorneys should bill for all the time they spend on a task, even if they expect some of it to be reduced. At most firms, attorneys will still receive credit toward their billable hour goals for all time entered, even if not all of it is billed to the client. It is essential for attorneys not to shortchange themselves on billable time, as this can hurt the firm and impede progress toward billable-hour targets.

Be Realistic About Billable Hours

It is important for attorneys to recognize that not all work is billable. An 11-hour day at the office may only yield eight billable hours, and that is perfectly normal. By setting realistic expectations for billable hours, attorneys can avoid undue stress and maintain a healthy work-life balance.

Strategies for Becoming a Proficient and Ethical Biller

While practice is key to honing billing skills, several strategies can help attorneys become more efficient and accurate billers.

Bill for All Billable Work

Young attorneys often only bill for significant tasks, such as research and memo writing. However, smaller tasks like reading and sending emails, taking phone calls, and reviewing documents also contribute to billable hours. Attorneys should strive to bill for all billable work to ensure they do not lose time or revenue.

Enter Time Daily

Entering billable time daily or weekly is the best approach to capturing all billable work performed. Even if a firm does not require daily time entry, doing so helps prevent the loss of billable hours due to forgotten tasks or "small-ticket" items. Consistently entering time can also help attorneys progress toward their billable-hour goals more efficiently.

Break Down Entries

When entering billing information, attorneys should break down tasks into discrete entries to demonstrate the value of the time spent. Instead of entering a vague description like "review of medical records," provide more detail, such as "review of 800 pages of medical records in preparation for drafting deposition outline." This level of detail allows clients to better understand the work performed and its relevance to their case.

Break Down Research and Writing

For research and writing tasks, attorneys should also provide specific descriptions of the work performed. For example, instead of entering a vague "research" description, specify the legal issue researched and the jurisdiction involved. This level of detail helps clients understand the scope of the work and makes them less likely to dispute billing.

Conclusion Although billing may not be the most exciting aspect of legal practice, it is essential to maintaining ethical and profitable practices. By understanding professional conduct rules, familiarizing oneself with firm and client policies, and employing effective billing strategies, attorneys can become proficient and ethical billers. This not only benefits the attorney's career but also contributes to the integrity of the legal profession as a whole. If you'd like to learn more, click here to schedule a FREE introductory consultation today!

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