Law Practice
May 30, 2001
Accurate Accounting
Do you want your clients to doubt your value, mistrust you or speculate whether your bills are padded or fraudulent? All this can be accomplished just by sending your clients vague bills.
Do you want your clients to doubt your value, mistrust you or speculate whether your bills are padded or fraudulent? All this can be accomplished just by sending your clients vague bills.
From the lawyer's perspective, recording time is a nuisance, relegated to the end of the day or month. And the busier or lazier the lawyer, the worse the entry. Vague bills and vague time entries in hourly bills, however, give clients few details about what the lawyer did or accomplished.
Clients are generally unhappy about spending thousands of dollars on such vague tasks as researching, reviewing files and pleadings, telephone conferences, checking the status of things and trial preparation.
Some lawyers even bill clients for time entries that are blank and pass expenses through to the client with little explanation or few details.
Lawyers need to consider the client's perspective. The bill is a very important communication mechanism and a chronology of what the lawyer has been doing. Even if the client is silent, assume that he or she will hang on every word in the time entries, and it may only be a question of time before the client boils over.
Cryptic time entries invite speculation that you are wasting time. If you commonly bill to "review the file" when you begin a new task, lay clients think you either have a defective memory or must have a very big file. Sophisticated clients usually have in-house counsel or auditors reviewing bills, so while they understand the bill better, they also expect a complete entry before they pay.
Regardless of the client's sophistication, all clients read bill entries for signals of how the case is really going and whether the lawyer is representing them well. They become suspicious, for example, if you seem to chat a lot with the opponent, even if you merely are honoring the local rule requiring you to "meet and confer" before filing a motion. Give more details in your time entries to explain what you are doing.
While most lawyers are honest in their time keeping, a few are not. For lawyers attempting to pad time entries, the cryptic time entry, especially when mixed with other tasks, helps to conceal their fraud. Clients sense this, and some jump to the conclusion that every cryptic entry is dishonest.
Also, remember that time entries are client communications under California Rule of Professional Conduct Rule 3-500, which requires a member to "keep a client reasonably informed about significant developments relating to the employment or representation." While some may argue that their bills are not "significant developments relating to the employment or representation," the bill is the only information clients receive to justify the lawyers' "employment."
Moreover, Rule 4-200(B)(11) also requires informed consent of a client to a fee. For the consent to be informed in an hourly billing situation, the client needs to know what the lawyer is doing to determine whether the time charged is consistent with the work performed.
If you run all your tasks for a given client and day into a single entry, sometimes called lumping or mixing entries, you run the risk that a problem with any part of the entry will undermine your claim to the balance. Even if most of the entry is detailed, for example, a cryptic reference to a "conference" with no subject causes most bill auditors to disallow the time entry unless the time expended can be segregated. That burden to justify the charge is normally on the lawyer who created the entry.
Another common problem is leaving out the subject of research or a conversation or failing to identify other participants in a communication.
John Toothman, co-author of "Trial Practice Checklists" and "Legal Fees: Law & Management," is the founder of www.DevilsAdvocate.com, a litigation and legal fee management consulting firm.
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