Hourly Billing Requiremements

Our hourly billing expectations of lawyers and support staff.

Balancing Factors To Achieve Fairness

Virtually every litigation firm that charges by the hour establishes minimum billing requirements for its personnel, including partners, associates and support staff. The two most notable exceptions tend to be partners who generate a substantial amount of business (“rainmakers”) and non-salaried lawyers, who are paid on a commission (“eat what you kill”) basis.

The subject of minimum hourly billing standards causes stress in most lawyers’ minds—until they become masters at billing, at which time they become the envy of other lawyers and typically find themselves on the road to significant pay increases and eventual partnership.

Billing large amounts of time is easy. Anyone can input substantial and numerous time entries. Billing time in an ethical manner is much more difficult. Billing time in a fashion that is perceived by clients as fair and equitable is also easy: one must merely keep time entries to a bare minimum so as to deliver high quality services for less than full value, and most clients will be happy, but the Firm will not be quite as thrilled, for our only way to make money is through generation of legal fees. From this we see that there exists a tension between keeping clients happy with fair and equitable billing and making oneself a source of profit to earn bonuses and higher salaries.

It is with this tension in mind that the Firm has established the following baseline hourly billing requirement:

The caseload that a lawyer should have to meet this requirement, or any higher target which the attorney sets for himself or herself is a variable of great importance. On this issue, see our Procedure: The Optimum Caseload.

Definition of “Billable Hour”

There exists a common misconception that the correct amount of time to bill for a matter is by definition the amount actually spent performing each task. The reason this is labeled a misconception is that blind adherence to that standard often leads to unsatisfactory outcomes in the business of managing a litigation firm.

The amount of time a lawyer actually spends on a task is only a starting point in the process of determining how much time should be billed. There are a host of reasons why time entries should be adjusted on a final bill.

Our definition of a “billable hour” is fundamental to our approach to the balancing of interests that must be factored into a proper fee for legal services.

The above definition is our benchmark, but it requires some explanation.

Effort and efficiency. The specific ingredients of a billable hour include, in definition (1), how much time is spent, as measured on a clock, to complete a task, but the variable of effort is part of determining whether the time was spent efficiently. Perfection is not the standard, but the time must be reasonable. If a lawyer bills 5 hours to find stock jury instructions on Westlaw, even if he actually spent that much time, he will be in trouble, for that task would take a properly trained attorney less than ten minutes.

Experience. Experienced lawyers tend to take less time to perform a task than novice attorneys. For that reason, law firms bill lower rates for less experienced practitioners. Consequently, it may be reasonable to allow for more time to be spent by a junior lawyer, but even then most firms will occasionally reduce billable entries made by younger lawyers in order to avoid alienating clients or breaching the ethical obligations mentioned below.

Results obtained. Definition (1) also requires consideration of the results of a lawyer’s work. Hourly billing agreements generally do not provide for adjustment of the fee on the basis of outcome of a case, or even parts of a case (such as motions practice, early settlement efforts and other objectives), though it is becoming more common for billing arrangements to provide for adjustments based upon such variables. Under definition (3), a lawyer who loses a case but who prepared it and tried it well while billing reasonably for all time spent is entitled to be paid the same as if he or she had won the case; though it is sometimes wise from a business standpoint to reduce a bill in the aftermath of an unsuccessful outcome, particularly if the client is a source of ongoing business.

Reasonableness and necessity of time spent. Definition (1) and (2) both take into consideration the necessity of the work for which time is billed. In a case involving wrongful discharge from employment, such as an age discrimination case, it would not ordinarily be appropriate to bill for a substantial amount of time reviewing the accounting documents used to prepare a company’s annual report. It could stretch a lawyer’s credibility to assert that such time should be spent in defending a claim of age discrimination because “no stone may be left un-turned,” or “the accounting records might show a financial basis by which the employee could have been discharged” when the actual basis of the decision was the employee’s drug use or substandard performance. Expending lavish amounts of time developing a claim or defense that is extremely unlikely to benefit the client’s position is not acceptable.

On the other hand, this principle has been frequently used by lackluster attorneys to justify failing to identify and skillfully execute all the useful tasks that make a case as strong as possible for the client.

Professional Judgment is key. One of the most essential attributes of a good lawyer is good judgment. On this point, see our discussion of Good Professional Judgment as set forth in the Firm Policy entitled “Terms of Employment.”

Failure to Enter Time Promptly

The Firm expects all billing employees to enter their time daily.

When an attorney falls behind on entering time, some of that attorney’s time is forgotten rather than logged, and the attorney fails to “capture” billable hours that have been earned.

It is a statistically proven reality that when an attorney chronically fails to follow this practice, the Firm does not receive the benefit of the bargain with respect to its obligation to pay a certain salary to that person.

There is only one reason for this kind of failure to occur regularly or chronically: the attorney lacks the discipline to succeed in an hourly practice. An attorney who lacks the ability to track time generally also lacks the ability to keep track of deadlines, promises made to clients, key strategic and factual details, and generally has a hard time achieving excellence in their career.  We have observed a direct correlation between an attorney’s ability (or lack thereof) to track time in a disciplined manner and that attorney’s ability to fully and skillfully research issues of law, to read and evaluate large record repositories (while noting the useful items contained in such records), to understand and recall key rules of procedure and evidence, and to produce quality written products, such as sophisticated and persuasive briefs and letters.

No attorney is perfect at keeping track of time, and some days are taken up with long depositions, or other totally demanding activities, so that it is often necessary to enter that time on the following day. However, when an attorney falls more than a day or two behind on entering time, the Firm is confronted with a real problem.

The financial losses to the Firm that result from lassitude in daily billing are the attorney’s responsibility to avoid. When the attorney fails consistently to do so, the Firm does not receive the benefit of the bargain when it comes to that attorney’s paycheck.

The Firm reserves the right to withhold paychecks when an attorney’s time is not up to date, and to reduce pay or discharge an attorney when billable requirements are not met.

Failure to Meet Minimum Billing Requirements

The billing requirement stated above applies without regard to vacation or sick leave. Chronic failure to meet the Firm’s minimum billing requirements may result in discharge or reduction in pay, at the discretion of the Firm.

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© Brett Godfrey 2020. All rights reserved. No portion of this material may be duplicated, disseminated or reproduced without express written permission from the author.