Ten Law Firm Invoicing Habits Guaranteed to Annoy Your Clients, Reduce Collections and Extend Payment Cycles (Part One of a Two-Part Series)

Are a series of easily fixed billing habits annoying your clients, and slowing or reducing your collections? When I was a BigLaw partner, I applied my own experiences as an in-house lawyer to coaching my colleagues, particularly junior lawyers, on how to make their time entries more meaningful and useful to their clients – in order to create good habits that I believe also make it easier for your clients to review your bills, which means they are more likely to get paid on time and without creating a distraction from your presumably excellent legal work.

I should mention two caveats. First, although for purposes of this post I’m assuming a primarily hourly billing paradigm, most of these comments apply to “alternative fee arrangements” as well. Second, I’ve assumed for purposes of this article that most of your clients have an in-house legal team, led by a General Counsel – but these principles apply equally to clients who don’t have lawyers on staff, as well as the solo practitioner General Counsel like I was at one point.

Today as I talk with General Counsels and other in-house leaders as part of my consulting practice, I continue to hear about a a fairly consistent set of correctable billing follies from their outside law firms. Based on my own experiences and those others have kindly shared with me, I have the following suggestions:

1. Input Time Daily: Promptly complete time entries, preferably by the end of each day. An in-house leader at a major tech company – who’s a really nice guy and not prone to hyperbole – recently used the word “loathe” when speaking with me about lawyers who do not input their time promptly. Being loathed can’t possibly be a good business retention or development strategy. I also believe that the longer any professional waits to record their time, the less accurate and meaningful their entries are likely to be. Finally, promptly entering billable time helps to reduce the risk of “end of project” billing surprises when a tardy timekeeper enters a material amount of “aged” charges.

2. Provide Meaningful Information: Include enough information in each time entry to allow the reader – even someone not intimately familiar with the details of the project or not expert in the substantive legal areas that had to be addressed as part of the project – to understand what was done, why it was done, and the value of the time spent doing it. Don’t follow the example I found when I reviewed a seven-figure bill for an M&A transaction: a lawyer at one of the top U.S. firms, who billed 195 hours on the deal (and had mid-deal 16% rate increase), provided the following remarkably cryptic time entries:

“Working on bid” – 8.75 hours;
“Work on bid financing” – 17.75 hours;
“Working on bid” – 5.25 hours; and
“Working on bid” – 3.25 hours.

Of course, the time required to write the entry should be proportional to the duration of the entry itself. To put it simply, more time billed = more words in the time entry, unless you’re sufficiently legendary in the legal field (think the late Joe Flom) that no one is going to ask how you spent your billed time.

3. Be Consistent: Avoid inconsistent timekeeping practices across multiple practice areas or offices. For example, I’ve reviewed bills from major law firms where some timekeepers recorded many discrete entries each day, while others consolidated all of their work into one daily entry. I’ve seen some lawyers charge for every minute of secretarial overtime, while others at the same firm viewed support staff overtime as something to be borne by the firm as part of providing “around the clock” services. And for goodness sake, have your colleagues input their time in a reasonably consistent format – it certainly exasperates me, and probably others, to see a bill that has some time entries in ALL CAPS and others in regular sentence case.

4. Don’t Be Annoying: Different things annoy different bill reviewers, but you should be able to eliminate each of these common offenders fairly easily:

• simple formatting issues (for example, failing to include the client’s internal project reference number),
• persistent failures to comply with corporate billing guidelines (whether something representing relatively small charges like per page photocopy cost limits, or something potentially larger such as billing for summer associates’ work),
• charging for project mobilization, including conflicts checks, without explaining why you think you should and confirming that the client approves doing so,
• listing partner billings first, associate billings second, and legal assistant billings third, when your client prefers the presentation of daily time entries in chronological order regardless of the status or role of the timekeeper so as to more easily understand the overall activity on each day of the billing cycle,
• unexplained billing rate increases (even if consistent with your firm’s historical practices for increasing rates annually, or upon a promotion from associate to partner), and
• one-time adjustments (even if in the client’s favor) that lack any audit-worthy explanation.

5. Keep a Watchful Eye on Billable Expenses: Closely vet any out-of-pocket expenses charged to the project. I believe expenses should be clearly stated and reasonably detailed, rather than lumped into a single line item (unless you’re sure that’s what the client wants). This is an area where it’s very easy to aggravate even the best client or embarrass them in front of their CFO with a small dollar amount, such as when a junior clerk in your client’s accounts payable department points out that your first-year associate passed through in-room movie charges or dry cleaning costs on a two-night trip to an out-of-town hearing. Also beware third party expenses that don’t show up on your client’s bill until months after the service was rendered – especially if the client thought billings for the matter had already concluded.

NEXT WEEK: Part Two, including work-in-progress, understanding your client’s needs, and coaching.

This entry was posted in In-house, Law department tools - e-billing, CMS, metrics, etc., Law firms, Legal expense management. Bookmark the permalink.

One Response to Ten Law Firm Invoicing Habits Guaranteed to Annoy Your Clients, Reduce Collections and Extend Payment Cycles (Part One of a Two-Part Series)

  1. Hi there- very insightful post, thank you. Your post caught my eye (via Pinhawk Tech Daily) because interestingly enough, as a dictation app & software provider, our law firm clients have found that their lawyers are using the smartphone dictation app to record billable time throughout the day. Its easier for them to use their voice vs. typing manually and they can record on-the-go vs. saving it all for the end of the day (or week or month!) as you mention in your post. We hear from law firms that its a constant challenge to get a lawyer to sit down and enter time into any type of system. It can be viewed as an unbillable, administrative task (aka: wasted time). The firms have found that transferring this administrative task to office-based support staff generates improved billable time. As such, the lawyer can simply use the dictation app after each client meeting or “job” is completed, record their hours with the client information and press “send” to their assistant. They can track when the task has been completed by their assistant, directly from their phone. That way they can get more done using their voice vs. constantly typing or entering in data. Look forward to the next post!

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