The term “billable hour,” a unit of time used in the legal industry, is common in popular culture but can be misunderstood.
What goes into a billable hour is more than 60 minutes of time, and timekeeping and billing practices differ. Here’s a closer look at how attorneys charge for their work.
Billing Increments and Ethics
If attorneys bill clients for time, they may choose to bill in increments of an hour. While some may charge by either the quarter hour (15 minutes) or a half hour (30 minutes), a tenth of an hour (six-minute increments) is becoming an industry standard. In theory, the smaller fractional periods protect clients from being overcharged.
Lawyers round up time to the relevant increment, so a seven-minute call is billed as a tenth of an hour (or a quarter hour, and so on). Beyond that, lawyers are ethically required to only charge for the time they worked for the client, says George Warner of Warner Law, a Minneapolis practice specializing in creditors’ rights.
One notable exception is that some jurisdictions allow attorneys to include in a fee agreement that they bill at least a half hour of time for any client calls received in the evenings or they bill time and a half during the weekend. Attorneys who use these provisions are often family law or criminal defense attorneys, and the intent is to discourage clients from constantly peppering lawyers for new information even after the courts are closed, Warner says.
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How Lawyers Keep Track of Their Time
The exact method of timekeeping will depend on the software and the attorney’s preferences.
While some lawyers still use paper logs in notebooks or calendars to track their time, many lawyers now rely on law practice management software to inventory their time.
One attorney may track a phone call by using a calendar function to mark the call’s start and end. Another might rely on a phone’s timer to tell them the call’s duration and then enter the time into the application.
Regardless of which technique is used, the result should be the same: The lawyer writes down the relevant amount of time (e.g., 0.4 hours) along with a brief description of what they did during that time.
These time records should be accurate and contemporaneous, Warner says.
What to Look for in a Bill
When a firm first takes on a client, it will typically assign them a client number and then a second number for each matter the firm works on. Thus if a client is assigned “4280,” then 4280.1 is for their lawsuit against Jane Doe while 4280.7 is for work relating to a contract negotiation with Widget Corp. The bill then lists costs for each matter, broken down by task.
Good lawyers send clients a bill that has a description of the services provided on the left and the corresponding amount of time on the right, Warner says.
So a bill might look something like this:
— Phone conference call with client regarding Jane Doe litigation 0.5 hour.
— Researched bases of liability and defenses for third-party defendant 1.0 hour.
— Drafted amended Jane Doe complaint naming third-party defendant 1.1 hours.
Attorneys bill each task separately for two reasons. First, this method is an industry best practice, Warner says.
Secondly, in different fields, parties may be entitled to attorneys’ fees. A prevailing party’s attorney will submit their invoices to the case’s judge, who then reviews the bills and determines how much of the fees the losing party must pay.
“If you don’t have those types of detailed bills, you’re not going to get the award,” Warner says.
How Bigger Institutional Clients Can Get Smaller Bills
Larger institutional clients may approach time differently than individual clients. For example, a Fortune 500 client’s contract may require that partners only bill their full rate when doing work requiring a partner’s level of experience, and associates must bill for associate-level work. Additionally, these clients might refuse to pay for administrative time, such as organizing case files, even if it’s related to their cases, Warner says.
Individual clients don’t necessarily know to ask for those adjustments, and they probably don’t have the bargaining power to get them in their contracts anyway.
Therefore, if the associate had to photocopy documents after the firm’s paralegals had left for the day, individual clients could end up paying an associate’s hourly rate of $200 for the time spent copying. By contrast, the institutional client might demand the firm charge a $25 hourly rate of a law clerk for the associate’s copying, Warner says.
When and Why Lawyers Don’t Charge for Their Time
Lawyers don’t charge for all of the time they spend on a matter for a few reasons.
Attorneys often have phone calls with potential clients to discuss pending cases and may not bill them for such calls. Similarly, attorneys may decide not to charge for the time spent drafting a fee agreement or overhead related to a new client, Warner says.
If an attorney is working on something they don’t normally do, they may write off some time they spent to get the particular knowledge needed to effectively represent their client.
Attorneys may “bill with a lighter hand,” Warner says, and write off a substantial portion of time if they’re representing a new client referred to them by another attorney in hopes that the referrer sends more cases their way.
Attorneys also discount bills for nonprofits or those needing pro bono representation, he says.
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Don’t Guess: Ask About the Billing Rate and Policies
Before hiring an attorney, ask about their billing practices, including how they keep time. At the same time, ask for an estimated budget. Experienced attorneys should be able to estimate the amount of time and money that a case will require, Warner says.
Clients can save money by asking what tasks they can do to help their attorney. Being prepared, including having relevant documents ready when an attorney asks for them, can reduce the bill. It can impress the attorney, who may believe the client will be more prepared and forthright during their representation.
So a client who saves money by being organized may be even further rewarded — with a better quality of representation.
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