Timekeeping and Billing Chapter 9 Timekeeping and Billing

Timekeeping Manual or Electronic See book for an example of manual timekeeping. Some “old school” attorneys still use manual timekeeping. Mostly all timekeeping is done electronically.

Billable v. Non-billable time Billable Time- actual time spent working on a case that is directly billed to a client’s account. Non-Billable Time- Time that cannot be directly billed to a paying client. (a) general firm activities (b) personal time (c) pro bono work

Recording Time One Tenth/Hour v. Quarter Billing Suppose you took a five-minute phone call from a client and your average billing rate is $70/hour. Using the 1/10 system, the fee for the call would be $7.00 or .1 hour x $70 = $7.00. BUT…if you were using the quarterly system, the fee for the phone call would be $17.50 since .25 is the smallest interval allowed. This is more than double the 1/10 calculation.

Timekeeping Practices Find out how many hours you must bill annually, monthly and weekly up front. Find out when time sheets are due. Keep copies of your time sheets. Record your time each day. Record your actual time spent; do not discount your time. Be aware if billable hours are related to bonuses or merit increases. Be ethical. Be aware of things that keep you from billing time.

Timekeeping vs. Billing Timekeeping: the process of tracking time for the purpose of billing clients. Billing: the process of issuing invoices for the purpose of collecting monies for legal services performed and being reimbursed for expenses.

Billing & Profitability Accurately track how much a client has paid the firm. Send regular bills (bi-weekly, monthly, quarterly). Provide client billings that are fair and respectful. Provide client billings that identify what services have been provided. Provide client billings that are clear.

Billing Vocabulary: Management Reports: used to help management analyze whether the office is operating in an efficient and effective manner. Aged accounts/receivable reports: shows all cases that have outstanding balances due and how long these balances are past due. Timekeeper productivity report: report showing how much billable and non-billable time is being spent by each timekeeper. Case Type Productivity report: showing which types of cases are most profitable. Electronic billing: When law firms bill clients using electronic means, such as the internet.

Why paralegals need to know timekeeping & billing: 1) In most law practices you are required to track your time and it can be charged to the case you are working on. 2) Many law practices have quotas or minimum billable hour requirements. 3) Most law practices are for profit so billing is crucial to the success of the practice. 4) Paralegals are sometimes put in charge of actually running the timekeeping and billing systems, including managing timekeeping process and generating bills. 5) If you are a contract paralegal or an independent/freelance paralegal then you need to be prepared to generate bills & bill time to earn a living.

Client Hourly Rate Fee based on one hourly charge for the client, regardless of which attorney works on the case and what he/she does on the case. Pre negotiated “fixed rates” that do not change based on years of experience or title. Paralegals $100/hr Attorneys $225/hr

Blended Hourly Rate Fee An hourly rate that is set taking into account that blend or mix of attorneys working on the matter. Could include associates, partners and paralegals. One rate for ALL Makes the bill much easier for a client to read.

Activity Hourly Rate Fee based on the different hourly rates, depending on what type of service or activity is actually performed. Court appearances $300/hour Legal research by attorney $225/hour Telephone calls by attorney $150/hour Drafting by paralegal $80/hour

Flat Fee A fee for legal services that is billed at a fixed amount. Will preparation Divorce Name change Bankruptcy

Earned v. Unearned Retainer Retainer fees are monies paid by the client at the beginning of a case or matter. ALL ARE EITHER EARNED OR UNEARNED. Earned: money that is entitled to be deposited into the attorney’s own bank account or into the office’s operating account. Unearned: kept in client trust and may be refunded to the client. This is actually the client’s money.

Escrow/Trust Account A separate bank account apart from a law office’s or attorney’s operating account. This is where unearned client funds are deposited and kept.