Legal ethics was the only class at my law school that covered billing and even then, only briefly. I vaguely recall learning a little about billing for the MPRE, but it is (rightfully) not a heavily tested topic. The first thing you should know is that two professional conduct rules come into play when discussing billing.
Billing is critical to the success of your law firm. And yet law firm billing, including billing clients and chasing down payments, can be one of the most time-consuming, repetitive, and dreaded parts of any lawyer’s day.
Billing clients for legal services, and collecting on those payments, is critical to the success of your law firm. Create a simple, straightforward billing process—with clear expectations for how clients should pay their bills—and you’ll reap the rewards of happier clients, happier staff, and a higher rate of collections.
While none of the comments to Rule 1.5 or Rule 8.4 explicitly address double billing, legal ethics experts agree that double-billing violates these rules. Marking up time also violates lawyer ethics rules.
4 Billing Mistakes That Can Land Unsuspecting Attorneys In Costly Fee DisputesNot Keeping Contemporaneous Records. When you're in the groove, it can be tempting to go from client calls into research and writing and just do your billing “later.” ... Block Billing. ... Vague Entries. ... Clerical & Paralegal Work.
Learn the Five Legal Ethics in Your Paralegal Studies Always be careful about your legal ethics: Learn why in your paralegal studies.Demonstrate Professional Competence and Personal Integrity. ... Always Respect Client Privilege. ... Avoid or Disclose Conflicts of Interest. ... Disclose Your Paralegal Status.
An increasingly common practice in AFAs is the request by the client for firms to submit “shadow bills.” “Shadow billing” is a practice where a firm submits a fee for an alternative billing arrangement along with invoices outlining the actual hours and work performed.
These principles include the lawyer's obligation zealously to protect and pursue a client's legitimate interests, within the bounds of the law, while maintaining a professional, courteous and civil attitude toward all persons involved in the legal system.
1. “Borrowing” client funds — Tapping into a retainer to cover payroll or overhead costs when those funds have actually been set aside for a client's specific matter can trigger an ethics violation — even if you plan on paying the money back “ASAP”.
Appropriate supervision is key because a lawyer is ultimately responsible for all the actions of any paralegal under their employ.
Shadow Invoices: This invoice type is used when the client will not be paying based on the actual work performed, but still needs to see a detailed invoice of actual work performed (for analytical purposes, not for payment).
The claims should be submitted as covered, and should include the following:Type of bill 11X.Condition code 04 (information only bill)Condition code 69 (teaching hospitals only - code indicates a request for a supplemental payment for Indirect Medical Education/Graduate Medical Education/Nursing and Allied Health)
Such claims are often referred to as no- payment or no-pay bills, or denial notices. In order to submit a no-payment bill to Medicare under HH PPS, providers must use TOB 3x0 in Form Locator (FL) 4, and condition code 21 in FL 24-30 of the Form CMS- 1450 claim form.
Attorney misconduct may include: conflict of interest, overbilling, refusing to represent a client for political or professional motives, false or misleading statements, knowingly accepting worthless lawsuits, hiding evidence, abandoning a client, failing to disclose all relevant facts, arguing a position while ...
All emails are printed and placed in the client's file. they end up in folders in Outlook, junking up memory. client. inbox into client folders.
It describes the sources and broad definitions of lawyers' four responsibilities: duties to clients and stakeholders; duties to the legal system; duties to one's own institution; and duties to the broader society.
Your law firm’s billing policy. To save your law firm valuable time and money, having a clear, standardized law firm billing policy in place is essential. It gives lawyers and staff something to refer to and keeps everyone in sync. If you’re writing a policy for the first time, you’ll want to consider:
Billing is critical to the success of your law firm. And yet, for many law firms, billing clients and chasing down payments can still be one of the most time-consuming, repetitive, and dreaded parts of the job.
LEDES, or Legal Electronic Data Exchange Standard, is a standard format for electronic legal billing that uses specific format guidelines. It makes it easier for large organizations to handle large amounts of files and data, and assess invoices, as all they will all be coded in the same format.
These should include when to send invoices, how long descriptions should be, what types of expenses must be included on bills and what should be written off, and any standard introductory communications on bills, if needed. 2. Write out the flow of your law firm’s billing process.
With the right system, you can send out bills and reminders quickly, so there’s no reason to put off billing your clients. Sending out smaller bills consistently can lower the shock of a large unexpected bill. Plus, there’s the added benefit of encouraging a smoother cash flow for your firm.
The Billing History Report provides a detailed view of open receivables, past-due receivables, and paid invoices. This provides a complete history of your clients’ invoicing.
To keep your billing process on track, you should keep a close eye on outstanding balances, payments, and revenues. The following reports can help you monitor your law firm’s financial health and keep your billing process running smoothly:
Billing is a task most lawyers hate, but it’s the way that we all get paid. The Georgia Rules of Professional Conduct require that attorney’s fees—money earned by lawyers—to be reasonable. There are a lot of factors in the Rule defining what is reasonable, of course.
A lawyer has a duty to communicate with the client. Rule 1.4 is generally vague, but more communication is always better than less. And perhaps better than simply “more” is to engage in regular communication. This applies to billing as much as it does to substantive issues in the client’s case or matter.
Part of the duty of communication is helping to educate the client. If all your client hears or sees is “words words words,” they’re realistically not able to make informed decisions about the representation. These clients are more likely to complain if things go poorly later on. So, make sure your billing statements are clear. What does this mean?
General billing statements, such as “conduct research” or “draft interrogatories,” don’t convey value that clients can understand and fully appreciate. Instead, provide additional context that indicates what was being researched and/or why the research was necessary.
Tip #1: Use written fee agreements 1 For a flat fee, a fixed amount that your client pays for a specific task, indicate whether the fee is earned on receipt or will be deposited into the client’s trust account. 2 For an hourly fee, explain if the client will pay an advance that you will bill against or if you’ll be sending them a bill each month. If you plan to bill monthly, indicate the specific day your client can expect it. 3 For a contingent fee, establish a specific percentage that you’ll take from any recovery. The percentage may vary depending on whether certain milestones have been reached. For example, you might charge a lower percentage if you are able to obtain a recovery before a trial.
It’s not reasonable for your clients to pay a lawyer’s rate for these types of activities. Keep in mind, your clients would be glad to see “no charge” on their bill sometimes. Every now and then, inform your client that you have completed a task without charging them.
So why do some clients choose to not pay their legal bills? When asked, most clients involved in legal fee disputes will tell you the primary motivator for not paying their lawyer was their sense that the amount they were being billed was unfair. Even one small item that affects the client’s sense of fairness in an otherwise large legal bill can sometimes be enough to delay payment and jeopardize the good will that the lawyer previously established. By closely following the tenants of 1.5, lawyers stand a better chance of having clients who understand the billing process and pay the legal bill on time.
The client’s counterclaim may be a simple tactic to leverage a bill, but because it is a suit against a lawyer, it must be reported to the lawyer’s malpractice carrier, creating an added headache for a lawyer who just wants to be paid.
ABA Model Rule 1.5, Fees, is the primary regulatory guideline outlining proper fee arrangements and billing practices. The rule addresses several aspects of fee setting, including contingency fees, prohibited fee arrangements, fee sharing, and whether a fee is reasonable. Many states are now considering changes to Rule 1.5 to reflect some of the changing ways lawyers and clients are contracting for legal services. Changes to the rule include provisions on flat fees, availability fees, nonrefundable fees, and unearned fees. In Minnesota, changes to Model Rule 1.5 were adopted by the Supreme Court in late 2010 and became effective on July, 1, 2011.
Because the fee is only for reserving your time that could be used working on other legal matters, your writing to the client should state the fee is for availability only and that fees for legal services will be charged separately. 6.
If the fee is shared with someone outside the firm, the client should know exactly where it is going. It is never a good idea to surprise a client at the end of a legal matter by revealing to them in a remittance statement that an attorney who is not a member of the firm will be sharing in some of the fee.
So what should a lawyer do to recover a legal fee in a matter that he or she is rightfully owed? Most practice management experts agree that the key to successfully recovering the firm’s net receivables is to take certain steps up front, at the start of the attorney-client relationship, that will put the lawyer in control of the matter if the client falls behind in paying. Also, what you do after the first time a client falls behind with a payment can determine whether you will ever recover anything for your legal services.
Legal fees, whether they are fixed, contingent, or shared with lawyers outside the firm, need to be reasonable. Changes in the rule addressing availability fees and nonrefundable fees are also based on what’s considered to be reasonable billing practices.
Approximately 90 percent of law firm clients who are billed on an hourly basis are “block billed.” Block billing is an accounting technique whereby lawyers aggregate multiple smaller tasks into a single "block" entry, for which a single time value is assigned. In theory, the total time charged equals the sum of the duration of each discrete task. For example, after spending five minutes on a phone call, 35 minutes revising a junior associate’s draft motion and three minutes dashing off a brief e-mail to the client, the attorney should bill the client for seven-tenths of an hour. Unfortunately, in far too many cases, the final block-billed entry for these tasks will end up looking something like this:
Another court observed that block billing allows lawyers to "claim compensation for rather minor tasks which, if reported individually, would not be compensable" and precludes the client "from determining whether individual tasks were expeditiously performed within a reasonable period of time because it is impossible to separate into components the services which have been lumped together." In re Leonard Jed Company, 103 B.R. 706 (Bankr. D. Md. 1989).
In order to minimize billable hour inflation, every client should implement outside counsel guidelines that prohibit block billing, billable "hoarding" and excessive incremental billing. However, these are just a few of the practices that lead to overbilling and should cause clients to carefully scrutinize their monthly statements. Please visit our website (www.litigationlimited.com) to learn more about these and other types of law firm overbilling, and the strategies clients can use to help outside counsel improve billing practices and rein in billable hour inflation.
Law firm overbilling - whether described as the euphemistic "bill padding" or simply "billing fraud" - is a serious problem that is seldom discussed and even less frequently addressed. But rare is the legal bill that does not include at least some "padding." In fact, according to the California State Bar, most bills are inflated at least 10-30 percent. This article describes three common ways legal bills are inflated and provides tips to help clients identify problematic billing practices.
When lawyers bill by the hour, they should never use increments greater than one-tenth of an hour. Glover v. Heart of America Mgmt. Co., 1999 WL 540895 at *7, fn 8 (D. Kan 1999) (quarter hour billing... has been virtually extinct for some time"). Yet it appears that anywhere from five to ten percent of lawyers bill clients in unacceptably large chunks of time - usually in one hour or half-hour increments. This is neither honest nor reasonable, and constitutes outright billing fraud, as courts have held that “professional persons who charge their clients fees in excess of $80.00 per hour, based upon time spent, cannot, in all honesty and reasonableness, charge their clients for increments in excess of one tenth of an hour.” In re Tom Carter Enterprises, Inc., 55 B.R. 548, 549 (Bankr. C.D. Cal. 1985). By way of illustration, consider these billing entries from a $750 per hour partner:
Now consider that, at least according to the California State Bar and nearly every state and federal court in the country, most lawyers' daily time submissions contain anywhere from thirty minutes to three hours of time billed to clients that was not actually worked.
However, two-thirds of lawyers admit that "bill padding" occurs at their firms, one-third of lawyers openly double-bill clients, and more than half of all lawyers perform work not because the client or case demands it, but because the lawyer needs to bill more hours. See William G. Ross, Professor of Law, Samford University, Attorney Billing Ethics Survey (2006-2007). Clearly, clients must be proactive when it comes keeping billable hour inflation under control. This article summarizes some of the most common billing practices that lead to billable hour inflation.
1) Over-billing clients is just plain bad business. So be a giver, not a taker. It will pay dividends. 2) Focus on quality, not billable hours. If you don’t, the client will find someone else who will. 3) Be clear with your clients regarding your reasonable billing practices. Include ABA Rule 1.5.
The cornerstone of a long healthy attorney-client relationship is trust, and this is directly connected to reasonable billing practices. Treat clients right and they will treat you right (usually…).
This rule states that legal fees shall be reasonable, and may be based upon a “time and labor required,” “novelty and difficulty of questions involved,” “the fee customarily charged in the locality for similar legal services,” “time limitations imposed by the client,” “nature and length of the professional relationship,” “experience, reputation and ability of the lawyers performing the services,” and other factors. These are all important factors in determining what is a reasonable fee, and you should include ABA Rule 1.5 in your engagement letter. Make sure you client understands your billing practices up front – no surprises!
If you gouge your clients, they will eventually figure it out, and nothing spreads faster than good gossip about a lawyer who is ripping off clients. You will lose everything in the long run: you’ll lose your reputation and you’ll lose your clients.
Be crystal clear with your clients. Communicate with them regarding your invoices so there are no surprises. Help them to budget accurately. And bill reasonably. Do the right thing: it will pay off.
As lawyers, we sell our lives one slice at a time “on the clock” at an hourly rate. We all feel some degree of pressure to push billable hours in order to increase our income, impress the partners, make a good bonus, and/or make partner. But here’s my advice: don’t do it. Bill reasonably and you will win big over the long run.
But this isn’t intended to be a lecture on morals; there are plenty of practical reasons why over-billing is a bad business strategy. Clients want high quality work at a reasonable price, so give it to them and you will achieve all the success you desire, and you’ll sleep well (as an added bonus)…