21st-Century Billing More Than Meets the Eye

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Do the work, send a bill. Simple, right? Wrong.

Billing is not as straightforward as it seems at first glance. As numerous court cases — and the American Bar Association's Formal Opinion 93-379 — have shown, billing can be a confusing and controversial subject. Consider the following issues:

Overlapping court appearances

How should you bill when you're going to court on the same day, in the same courtroom, for more than one client?

From a purely logical perspective, if the clients have agreed to hourly billing, it's difficult to justify billing each one for overlapping effort. After all, you only have to make one round trip to the courthouse, find one parking space, ride the elevators up one time, etc.

That's the underpinning of the ABA's opinion, which says that lawyers have to clearly disclose to clients how they will bill and that they cannot bill for more time than they actually spend.

A problem arises, then, if the clients believe that they are being billed for time but you are billing by the task (e.g., "court appearances") or by minimum amounts of time. But the way to handle the situation is simple: Advise your clients up-front of your methodology. For example, if you choose to bill by the task, tell the client that a court appearance will be billed at a certain rate even if you have to be in the same court on another matter.

Travel for out-of-town meetings

Transactional lawyers sometimes charge one client for their travel time, then, while traveling, charge another client for work done en route. Clearly, if charging by the hour, the "double billing" that would occur on an airplane if the attorney were to charge multiple clients for the same time is unacceptable.

But the attorney could have a policy, clearly explained to the client prior to the engagement, that the client will be charged a flat fee for travel time, irrespective of work performed.

Improved technology

Most attorneys develop systems incorporating automated technology and support staff as they mature in their practices.

The cost of the high-technology equipment and additional staff must be paid for somehow, and most service providers pass that amortized cost on to the customers or clients.

Quite simply, it makes sense for many attorneys to develop a laundry list of predetermined charges in addition to the hourly billing standard. While several state bar rulings have attacked such unit or laundry-list billings, they have generally been found to be acceptable and ethical — again, as long as the client is informed in advance.

Reused work product

Reused work product also leads to a billing conundrum. Letters and documents such as pleadings and contracts can be created from earlier matters handled by the attorney. Billing questions quickly arise, though:

How should the attorney charge for the second or third matter if the work utilizes recycled documents?

Is the charge based on the number of hours it took to develop the first set of documents; is it the actual time expended by the attorney, which is less because of the form created earlier; or is it a hybrid charge of something more than the actual time but less than the time required for the first set of documents?

If the attorney uses the form developed in the first client's matter to benefit the second client, should the first client receive a refund of a portion of his or her fee?

Similar to the cost of the high-technology equipment and additional staff, most service providers pass the amortized cost of reused work product on to the customers or clients. Such billings are likewise considered acceptable and ethical as long as the client is informed ahead of time.

If you are looking for guidance on your next big decision for your firm contact a legal coach today at 800-837-5880.

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