Client: Can we talk about how you’re going to bill me in this lawsuit? I’m cost-conscious. Plus, I’d like to avoid surprises in the legal bills.
Attorney: Sure. You have a straightforward, non-complex case, so that makes it easier for both of us.
C: I’ve heard that big corporations give billing rules to their outside lawyers. What are those?
A: They’re called “outside counsel billing guidelines.” They are basically a set of “do’s-and-don’ts” for what the outside attorneys can and cannot bill for when they handle a lawsuit for a big corporation. However, since this is a small law firm, we don’t have anything that formal here.
C: But you still have some rules-of-thumb, don’t you, for how you bill your clients?
A: Absolutely. There are a lot of court cases that say what’s reasonable and what’s not. We try to adhere to that.
C: Tell me what you mean.
A: For example, the courts say that attorneys shouldn’t overstaff a lawsuit. That means having more attorneys working on it than are really necessary.
C: How do you avoid having too many attorneys on a case?
A: By having only one of my law firm’s associate attorneys assist me on a lawsuit like yours. Sometimes maybe a second associate. But usually no more than that. I try to concentrate most of the legal work in the hands of as few attorneys as possible.
C: Do you take steps to make sure those other attorneys don’t step on each other’s toes in the case?
A: Yes, by making sure there is a clear division of labor among all the attorneys on the case. The courts say it’s okay for more than one attorney to work on a case, so long as they aren’t duplicating one another’s efforts by overlapping and re-doing each other’s work.
C: What do you do about court hearings, witness depositions, and meetings where an attorney has to attend?
A: To avoid unnecessary duplication of effort, I sent only one attorney to those, even if it’s only me. Sometimes, though, I take a paralegal with me if there are a lot of case documents that I need to bring with me to the hearing, deposition, or meeting. I can’t talk and search through a pile of documents at the same time. The paralegal manages the documents for me.
C: When you’re delegating work to your associates, do you think about which attorney would be most appropriate to do that work?
A: Yes, that’s what the court cases say to do. It’s called “delegating to the least-expensive, capable biller.” The biller is supposed to fit the task. If I think some task in a lawsuit doesn’t require my involvement at my $250 per rate, I delegate it to one of my associates at their lower $150 per hour rate. I make that judgment call.
C: Are there other times when you do the work yourself?
A: Yes, for instance, when I have done that same task enough times before that I can get it done far more quickly than one of my associates, who are less experienced. Even at my higher hourly rate, it still ends up costing less in legal fees if I do it.
C: Do you use paralegals, too? That saves money on legal fees, doesn’t it?
A: Yes, if I think a paralegal can handle a task well enough, I’ll delegate it to them instead of an associate. Paralegals have the lowest hourly rates in our law firm.
C: What about secretaries?
A: The courts say we can’t bill clients for secretarial work, so we don’t. Same goes for menial office clerk work. That’s part of our law firm’s overhead. Law firm overhead is usually not billable. It’s included in our attorney billing rates.
C: What about attorney conferences that you have in the office? How do those get billed?
A: If an in-office attorney conference involves your case, you’ll get billed for it. Sometimes I’ll only bill for my own time, not the time of the associates I’m meeting with. Other times I’ll bill just for their time, not mine. However, I do reserve the right to bill for both of us if it’s an important conference.
C: What about legal research? I’ve heard that can be really expensive in a lawsuit.
A: I usually delegate legal research to my associates at their lower hourly rates, instead of doing it myself. We may have to research everything we do in your case as we go along, because we need to make sure the law hasn’t changed. However, we keep legal research to a minimum for really basic, routine legal issues in the case.
C: Do you charge for preparing the legal bill you send me each month?
A: No, although you’d be surprised how much time is involved in doing that. First, all of the attorneys working on your case keep track of their hours either on written daily timesheets or by inputting their time directly into their computers each day. Our accounting department collects all that time, and then prints out a preliminary, draft legal bill called a “pre-bill” or “work-in-process.” I review that pre-bill to make sure there are no errors. If I have questions about an attorney’s time charges on the pre-bill, I ask them to explain. Then the finalized pre-bill gets turned into the legal bill that is sent to you. I don’t bill for any of that time.
C: Do you bill your time in fractions of an hour?
A: Yes, in tenths-of-an-hour, or every 6 minutes. If a task takes 6 minutes or less, we bill 1/10th of an hour for that. If it takes 7 - 12 minutes, it’s 2/10th’s of an hour, and so forth. We always round up. We also describe the purpose or subject matter of each task in our billing entries, so you can see how and why the work related to your case. We also bill in single-task format, so you can see the amount of time we actually spent on each task in the legal bill. We give you that breakdown.
C: What about charges other than for your legal fees? Will those charges be on the legal bills, too?
A: Yes, those are “costs and expenses.” We include them on our legal bills.
C: How do you charge for costs and expenses?
A: For example, if we have to pay an outside vendor, like a messenger service, we charge you what they charge us, our actual cost. We don’t mark up their invoice with a surcharge to try to make a profit on that.
C: Will I have to pay for every cost and expense, or are there some you don’t charge for?
A: We charge for all necessary costs and expenses, with a few exceptions. For example, although we reserve the right to charge you for word processing in our written attorney retainer agreement, as a practical matter we don’t, except in unusual circumstances. That’s secretarial work. I even word-process many documents myself on my own computer, but I only charge you the legal fees for my time. I don’t add a separate word processing charge on top of that.
C: Photocopying and faxing?
A: These days, attorneys are charging 10¢ - 15¢ per page for in-house photocopying. We do that, too. We try to use e-mail as much as possible so we don’t have to send faxes, but if we do, we charge the same rate per page as photocopying. Just for outgoing faxes, though, not when we receive a fax. Remember, a fax is just an outgoing telephone call.
C: What about legal research charges?
A: Like many attorneys today, we subscribe to online legal research services like Westlaw or Lexis. They allow us to keep track of how many minutes of legal research time we spend on a particular client’s case. We get an invoice for that amount, and bill you for it. We don’t use the law books in the law library as much anymore.
C: What if you need to hire outside consultants or experts on my case?
A: We’ll get your approval first. We’ll also get a budget estimate from them in advance, and show it to you.
C: Travel?
A: If we have to travel either locally or out-of-town on your case, we’ll put the name of the attorney who traveled, the destination, and the reason on the legal bill. But you’ll always know if we’re going to be traveling somewhere, because we’ll be talking about the case with you regularly.
C: Anything else?
A: No charge for ordinary, routine office supplies that we use on your case. Only if we have to pay an outside vendor for something unusual or specific only to your case.
[TO BE CONTINUED]
© 2008 Ken Moscaret. All rights reserved.