Examples of Entries in Legal Billing
Legal billing entries are the line items on a legal invoice (invoices being a legal bill). They are descriptions of the legal services that an attorney or firm provided for a client, often used to justify a client’s payment. A line item may detail what a lawyer or paralegal did for the client. It may describe when the professional was engaged by the client. Or it might state how much the client was charged and what the hourly rate was. Invoices that use line-item billing make it easy to see how much time the law firm spent on the client’s project and how much each task cost the client.
Because legal billing entries show how much time a lawyer spent on a project, they provide transparency , which is a bonus for the client. Sometimes law firms won’t break down their invoices this way. Instead, they will put everything together in one line item, such as "completed Project ABC" or "provided legal services on behalf of XYZ Corp." This method is not transparent and can be frustrating because the client doesn’t have all the details on the specific tasks that the lawyer performed.
Simple examples of legal billing entries are as follows:
Jun. 10, 2014
5 hours
Smith, John J.
ABC Corp v. Smith
Civil Matter
Resolved motion to dismiss.
Jun. 12, 2014
4.6 hours
Smith, John J.
ABC Corp v. Smith
Civil Matter
Prepared discovery; Exchanged documents with counsel.
Jun. 18, 2014
2.6 hours
Robertson, Ann B.
ABC Corp v. Smith
Civil Matter
Deposition of Christine Morgan.
Types of Entries in Legal Billing
There are three basic types of entries in legal billing: timekeeping entries, expense entries, and fixed-fee arrangement entries.
Timekeeping Entries
Time entries are by far the most common type of billing entry used. Most people think of time entries as being purely descriptive in nature, but in fact, they can be extremely persuasive as well. Time entries may have a logic or story to them, whether regarding a particular event or case as a whole; and they may suggest the personalities involved (including emotions) or the level of input from the client, among other things. For example, a time entry regarding settlement discussions might include the emotional tenor of negotiations, how receptive or resistant the opposing counsel was, or how much involvement in the discussion the client had. In this way, you can persuade the reader that you were really there with the client in the trenches in a way that goes beyond words on the page. You can also try to convince a trier of fact or others that you performed work of a particular value by making the words and phrases in your time entry speak for themselves. For example, using flowery language or selecting terms that are not purely clerical in nature can sometimes assist you in this. Contra-indications to persuasive timekeeping entries include being overly concerned with billing those tenths of an hour and thus filling each entry with meaningless verbiage, or on the flip side, being so terse that the reader simply does not appreciate the effort you put forth. The important point is that each of your time entries should be written with care and thoughtfulness, because you never know who will read them, or for how long, or what they might glean from their contents.
Expense Entries
Expense entries may generally run the gamut from simple descriptions or one-word entries, such as "Copy" or "Fax," to more elaborate descriptions, such as "Microfilm image of two reels of depositions and copy of 25 pages." The trend in the industry today is toward the shorter or more factual type of time entry. In addition to being too short or too long, expense entries are subject to some of the same contra-indications described above in relation to time entries – namely, if you need to explain why you incurred an expense or its particular amount, then do so, but also, make sure that the reader does not feel either over or under-billed when reading your explanation. This requires some practice, but it is worth the effort.
Fixed-Fee Arrangements
Typically, the earliest invoice for a fixed-fee project will include a brief explanation of your fee arrangement and request payment, while later invoices might show either payments received or on a net basis the fixed fee relative to the work completed. In the case of a fixed-fee arrangement, when you have exhausted the subject of the case, you write that you have completed work on the matter, and typically, you ask for the rest of your money. Of course, you need to keep in mind that whoever paid the first invoice on the matter might not pay the second, so it is likely a good idea to spread out your request for payment over the life of the matter, if you can.
Proper Practice for Legal Billing Entries
When it comes to billing entries, GT hilltop’s Kirk Broz and David Stein had a mantra: a billing entry should be like a photograph, but it must still tell a story. This philosophy guides billing entries toward both accuracy and readability. "If a lawyer has an issue with the entry, then the client will as well, so we are always searching for the happy medium," says Kirk.
Be Detailed
Billing entries should be detailed enough to explain the task performed in light of the client’s understanding of the matter/issue. This is particularly important when billing on a flat fee. Flat fees are a popular structure because they allow the client and the firm to manage the cost; however, flat fee time should always be broken out into enough detail to illustrate what was done.
Be Consistent
Regardless of which way the firm decides to bill, consistency is key across matters. This article references "a firm" but the same rules would apply for a solo practitioner. If the firm uses a specific format for one matter, there should be no difference in the level of detail or the way tasks are described for another. The only exception would be if the client builds in exceptions (i.e., we don’t normally need to bill research). As a result, past history with the client usually dictates how to proceed. Inconsistencies are like speeding in a school zone – you cannot plead ignorance or hope that no one saw the discrepancy. If the client has a preferred style, and the firm does not use that style, it should be noted in the guidelines and the firm should be prepared to comply. The firm should also be prepared to explain the "reason why" when billing style doesn’t match the expectations.
Be Compliant with Your Own Guidelines
Finally, billing entries should follow the firm’s internal guidelines for formatting. A firm that has chosen to use summaries should be doing this the same across all entries on a matter. Clients often ask for reporting in a specific format, and if it is not specified in the guidelines but has been cleared, then the firm should still use that format. The firm should discourage the client from asking for exceptions if at all possible, but it should still be able to bill the client in their preferred style if the client thinks it is important. This is one instance where the staff must be compliant with the client’s preferences, even if the firm does not necessarily agree with them.
Don’t forget that invoices are also marketing materials. Your invoice is building a brand for your law firm. To differentiate yourself from others, you should consider using customized preprinted invoices. These become a physical extension of your brand that clients will hopefully be more likely to remember.
Examples of Mistaken Legal Billing Entries
For managers or owners just looking at spreadsheets, billing matters may be difficult for them to spot. However, as administrators and managers become more in tune with firm operations, they find the time to focus on billing entries. Administrators are generally the first to notice when attorneys are making billing entry errors frequently.
One of the errors we frequently see is attorneys entering the same non-billable code each day for their entries in one matter. For example, if you have a promotion for complimentary breakfasts in your office daily, attorneys will frequently enter something like "Breakfast per promo" for each day. This is an error. You should never have an unbilled entry that has the same description on consecutive days. If it has the same description , it probably means that someone is conservative with their billing and is holding up the billing because they are really not sure what is correct. It would be better for the billing person to reach out and ask the billing attorney what the entry means than to hold up the bill because someone is concerned with how conservative they will be.
Another error we see frequently is the basic "Litigation Preparation" code. This code is often used on the last day of a trip or for a period of time in which no work occurs on a matter. Timekeepers will use this code in situations when they are entering time they know isn’t related to the matter but is taking them too long to figure out which code to use in billing or the time. We recommend you have staff enter a code such as "coding error" or "firm use only" to highlight entries that are not clearly related to matter time. If firms have staff coding entries, they need to ensure they are using the correct code related to the task/work being performed by attorney or their staff. Positive identification and use of correct billing code categories will help to ensure your bills are being reviewed with the appropriate level of detail which can also help ensure prompt payment.
Tools for Legal Billing in Technology
The evolution of software and practice management tools have improved the timekeeping process and efficiency in general. Many of these tools can be integrated with their practice management system, allowing one click timekeeping and billing. However, these programs are only as effective as the manner in which you use them.
Most people are now familiar with and confident in the use of general timekeeping software. However, there are additional programs that have become increasingly popular such as timekeeping programs in the cloud, case management billing programs, and programs that allow for timekeeping via email.
While there are many timekeeping platforms on the market today, we will briefly cover the following popular programs:
MyCase web-based practice and case management software, allows you to keep current billable tasks, messages, and time tracking all in one place.
Clio allows you to track your billable hours, expenses, and invoice status all within one platform.
TimeSolv is a web-based program that creates an easy to read time billing report.
How we utilize these programs with our daily work often determines how accurate our timekeeping and billing is.
Examples for Legal Billing Practice
To examine the impact of effective legal billing practices on a law firm’s success, it makes sense to review the experiences of a few hypothetical firms we’ve constructed based on real-world practices.
Firm A: Spending Significant Time Creating Bills
Firm A believes they have to spend a lot of time creating bills for their clients so they make almost every time entry on the bill in the description field. This takes a lot of time and can lead to a hefty bill with a lot of boilerplate information. For example, if a lawyer spends two hours on one particular motion and the motion ends up being a form motion, Firm A will still bill two hours for the drafting of that motion. However, the lawyer providing two hours for research and drafting of a motion but thought it would take six hours to draft because that is what they thought was the norm. As a result, the lawyers’ practice undercharges for the appropriate amount of time spent on the motion and creates a huge time entry when there really is no need to do so. Firm A also makes sure they have individual entries for every consultant, expert and anyone from outside the office that has been involved in that motion. When the bill arrives in the client’s inbox, they spend a good deal of time going through the itemizations and trying to figure out the basis for the charges. Firm A’s billing practice creates confusion and cost for both the firm and the client. This is not an ideal practice overall and if the firm is 60% billable, it may be because they are billing in this manner and wasting their time.
Firm B: Creating Inaccurate Bills
The scenario for Firm B is not as a good one. Their timekeepers enter all their notes at the end of a time interval. They are not very proactive about creating detailed notes during the period it was happening . This is often the case because many time entries seem to be a rush at the end of the time interval. On an invoice such as this, the detailed notes are very raw. You might see something like this: Instead of creating a new motion to compel due to discovery disputes – reviewed and annotated discovery responses and deposition of Plaintiff. Tgc met with ctnl regarding overall strategy. What is this telling the client? A lot but it isn’t exactly clear and it takes a long time to read about a simple discovery motion. The other problem is that everyone covered in that motion, including the plaintiff is billed. This does not make for good transparency or give the client a clear picture of the costs involved with motion creation.
Firm C – Being Concise While Being Descriptive and Accurate
Firm C has a project manager that enters time. The PM enters three lines of appropriate detail for each category to help keep the time accurate and transparent but also saves time through the automated billing system that floats these descriptions through the consolidated billing template. For example: Motion to Compel: Reviewed and annotated discovery responses – 0.5 hours Contemplated strategy to discuss with Tgc – 1.0 hours Motion creation – 1.5 hours These descriptions are available when the invoice is sent and when reviewed are very clear. There are no long descriptions and the billing is transparent with a clear description of the value to the client. There is also no concern about how the costs are allocated. Everything in the administration and organization fits on one page. With appropriate attention to detailing the work you do in appropriate and concise ways, you will be making it easier for your clients to understand how their money is being spent while reducing the burn on administrative work related to billing processes and creating accurate bills.