As 2016 comes to a close, every lawyer is focused on collecting outstanding billings and fees. And many are realizing the bad news that certain invoices are harder to collect. That means that this is also a good time of year to reassess billing practices. In addition to collections, a practice's method of billing can also directly impact ongoing financial viability and is an important part of an individual lawyer's ethical and professional obligations.
In fact, one aspect of the duty to communicate with clients is to keep them informed about legal fees. Rule 1.4 of the Georgia Rules of Professional Conduct describes a lawyer's duty to communicate with her client. It provides that "[a] lawyer shall . . . keep the client reasonably informed about the status of the matter [and] promptly comply with reasonable requests for information . . ." Generating and sending accurate and honest billing statements on a regular basis can be a part of complying with Rule 1.4.
While some states require lawyers to provide billing statements within a certain time period if requested by a client, most states, including Georgia, permit lawyers great discretion in developing billing practices that are suitable to the law practice and beneficial to the client. Here are some points to keep in mind when reviewing billing practices.
Record billable time contemporaneously
Trying to recreate accurate time entries long after the billable tasks were completed is an arduous process. Small but important tasks can easily slip the mind, resulting in under-billing. Or worse, an over-estimate can result in billing clients for legal services not "rendered." Of course, it should also go without saying that all time entered should be honest and accurate—no false recording or "padding" of time should be tolerated.
While traditionalists prefer paper timekeeping logs, some attorneys and law firms are turning to matter-management software to record and track billable time. These electronic resources include built-in timers, which help attorneys document their time to the tenth of the hour, the ability to store and auto-populate frequently used descriptors, tasks, matters, and clients, and readily available information regarding billing data, trends, and invoices.
Many law practices require their attorneys to enter their time on a regular basis, be it weekly, monthly, or even daily. Some law firms even penalize attorneys financially for failure to comply with the internally-set deadline.
To avoid under- and over-billing (and reduce the risk of a professional liability claim), it is key to log billable time contemporaneously. Doing so also saves time from having to re-create the entries at a later date and reduces the risk that a client will successfully challenge the invoice in the future based on an allegation of inaccurate or "padded" attorney time.
Use detailed billing descriptions
Bills are one method of communicating with clients about the work being performed on a matter. In some situations, a client may not fully appreciate the important work that its lawyer is doing, even where the client has discussed or approved of a strategy in advance. Vague billing entries add little clarity to the scope of work performed. Instead, they can lead to misunderstandings or significant problems that compound over time. As a result, if billing entries are not sufficiently descriptive or helpful, clients may question whether the sum of legal fees is worth the services that were rendered—and for good reason.
By contrast, detailed billing entries serve beneficial purposes for both client and lawyer. Not only do they convey in clear terms all of the work that was performed, but they can reflect client consent for a host of tasks, remind the client of a particular course of action, minimize or help resolve billing disputes should they arise, and serve as a defense to a malpractice claim.
Send bills frequently and regularly
While the element of surprise might be strategically beneficial in an adversarial representation, it is never advisable in a client representation. Attorneys usually have better success in collecting fees from clients when those clients are not surprised as to the amount of or justification for the bill.
Here is a classic example: Consider an attorney who speaks to a client several times a week regarding an ongoing, complicated matter. The client reviews pleadings and approves of strategy. Then, the attorney sends the client a single bill at the conclusion of the representation covering months of work. For most clients, this could result in "sticker shock" and a question regarding whether the work performed was really necessary (particularly if the matter has meandered onto a different path or where the final result was less than fully optimal).
Less severe, although quite common, are representations during which the attorney sends out billing invoices erratically over long periods of time. From the client's perspective, this irregularity creates a sense of unpredictability, which typically results in later problems that increase the likelihood of a Bar complaint or malpractice claim. For lawyers and law practices that want to avoid raising any eyebrows, billing invoices are generally sent monthly. Some clients will request bills on a quarterly basis. The important thing is that there is some regularity to the process.
Sending bills frequently and regularly is beneficial to both lawyer and client. The most obvious benefit to the lawyer and law practice is financial—cash flow holds steady and expenses, such as consultants or experts, court costs, and other incidentals, need not be "carried" by the law practice for an extended period of time.
Recording billable time promptly using detailed descriptions of work performed and then regularly and timely sending billing invoices will help to ensure that both lawyer and client remain on the same page during the course of any representation.
As published by the Daily Report