Law Firm Billing

I just started doing some work making phone calls for a law firm. I’m fascinated that they bill in six minute increments, even for things that take only a few seconds. How did this sort of billing come about? And why do clients put up with being billed for much more time than is actually spent working? Is six minutes a standard, or are there places that bill for a minimum of a longer period (for example, ten minutes instead of six)?

SMM

It makes billing easier. 6 minutes means 10 6 minutes slots in one hour. 80 slots in a day (ha!). You bill lets say $8 per slot. At the end of a day you see that you have spent 24 slots doing the client X’s case. 24 x 8= $192.

Six minute increments mean time can be billed by the tenth of an hour. This makes the accounting involved easy and efficient. Going to smaller (e.g., hundredths) or differently divided (e.g., 6ths [10 minute]) increments would be noticeably unwieldier.

Given that the unit of billing is a tenth, the customer pays for said tenth when any or all of it is used. An analogy would be buying a soda in a 12 oz. can – it’s sold by the can, and you pay for a can whether you drink all of it or just a few ounces of it.

I would venture that in the majority of cases the services are grouped in larger bunches, say three hours and fourteen minutes billed as 3.3 hours, and clients are thus not billed for much more time than actually spent, but only a tiny fraction more.

This general approach to billing (increments that are not always precise) is not unique to law firms. There comes a point where it’s just not feasible to slice things as thin as is conceivable.

It seems like you’re laboring under a misapprehension. When you finsih working on a matter, you round your time to the nearest tenth of an hour. Therefore, if your task for a client has taken less than three minutes, in most cases it is not billable to them. If you make several phone calls on behalf of a single client, or work on multiple tasks for one client, such that you spend more time on that client’s work, even if any particular task is very shot, that’s fine, because all that time aggregates. But if you make brief phone calls for different clients such that you don’t spend at least a few minutes on work for a single client, then they shouldn’t be billed. And if you do work for two clients during a single segment of time (say, from 1:00 to 1:06) and bill them both for that six-minute period, that’s fraud.

–Cliffy

Lawyer here: if the task takes less than six minutes, I don’t bother to bill for it. Unless there are a bunch of tasks that, added up, would be more than that minimum.

Also, billing is not so much of an exact science, in one respect - the total hours worked is a maximum, but very often lawyers “write off” some portion of that time if the task takes longer than it should, to keep the client happy. Particularly lawyers who, like me, require repeat business.

Um, I don’t know of any law firms where you would not bill a task if it took less than 3 minutes. Double-billing, of course, is really not supposed to be done, and I quit working for the one firm I was with that did it. But if you have standard minimums for some things (like appearances), you can effectively double bill under some circumstances.

Of course, it all depends upon what your contract with the client specifies you will be doing.

I’ve worked for three law firms as an attorney and I’ve never heard of anything like this. I’d love to see a cite for your claim that it’s fraud, because everywhere I’ve been, it’s standard practice.

I’m not a lawyer, but rather a computer consultant, and I bill in 1/4 hour increments. If a client calls, evn if it’s for a 2-minute call, they get billed for 15 minutes. They’re aware of this, and usually try to bring multiple items to any phone call, so they can use up 15 minutes of my time.

Most firms bill in either quarter-hour or tenth-of-an-hour increments. In general, quarter-hours are preferred, but clients who demand economizing will insist on tenths–at least, that has been my surmise and who knows if it actually makes things cheaper (although once a client is known to raise an eyebrow at the bill, partners will write more off, especially if the client is an important one).

Most firms also have a de minimis rule which means you should not bill for tasks that are seconds in duration. Perhaps there are other related tasks that are fairly attributable to the client that add up to make the charge fair (for instance, researching contact information or reviewing records to generate the content of the phone call)?

At any rate, these rules apply not simply to lawyers but to most professional services firms (so you will find similar rules for accountants and consultants and the like).

Do I gather from the input above from lawyers that it is common and acceptable to bill in such a way that you could conceivably work 8 hours in a day but due to rounding errors bill for 9 or 10?

A couple of points – remember that “billable hours” does not equate to “My attorney paid attention to my case for exactly this period of time”. Such things as secretarial staff preparing correspondence, thinking about the case without contacting anyone, etc., are not billable as a general rule (depending on the terms of the attorney/client contract for specific cases, of course – using a law firm’s letterhead to attempt to collect a large number of relatively small debts, for example, the secretarial time might be billable).

The consulting firm I worked with normally kept time in quarter-hour increments and billed in full hours, writing off any fraction beyond the number of full hours. Since my work was partly clerical and partly ‘professional’ I was required to keep track of both billable hours and non-billable hours for each client. The law firm we worked with always billed in half-hour increments. The engineering firm had a flat-rate fee schedule for its services, but this was based largely on professional time and equipment use.

Right – but “rounding errors” is an inaccurate way to phrase it. The service you are paying for is not purely the attention of a disembodied lawyer – he works in an office, with secretarial staff, professional subscriptions so he knows what the courts have recently decided that might to be relative to your case, etc. The half hour you are billed for his five-minute phone call includes the five letters his secretary spent an hour typing as a result of what you and he decided, the time he took last night reading case law that might affect your case, and so on.

Between write-offs and write-downs, generous application of the de minimis rule, non-billable waiting for responses from clients and partners, and the fact, as mentioned by Polycarp above that not every moment spent on a task that is fairly attributable to the client gets billed (even before writing off), the allegation that for your typical attorney the ratio of billable hours to hours at work is greater than one is not very accurate.

You could bill for 9 or 10 hours for an 8 hour day without making rounding errors, too; in corporate law, some clients will set a fixed price for certain common tasks - say, preparing a certain pleading, and rather than have to deal with an hourly rate and a prix fixe rate, you’d just express that fixed price in hours.

So if your Notice of Googley Moogley is always a .5, but it only takes you ten minutes, that’s some of your extra time right there.

K_G, he just suggested it’s conceivable.

I work in accounting, not law, but we also bill in 6-minute intervals. One of the things I’ve found is that there’s no such thing as a 2-minute phone call. Sure, I might have been physically on the phone for 1 minute 48 seconds… but I need to:

  1. document the question and response
  2. pause and unpause my current billing
  3. gather my thoughts and get back to another task

Those things generally take longer than 6 minutes, but I’ll only bill for the 6.

E-mails are the same way. I tell my staff that no e-mail takes less than 6 minutes… if it does, you probably forgot something.

I understand how costs are allocated, overhead, G&A, all that. But can it happen that I work a solid 8 hours for one client, and bill him for 8 hours, then another day split the day among many client and bill a total of 9-10 hours for the same amount of work?

I wasn’t entirely clear. If you have two clients that take up some amount of time that is otherwise billable, and you happen not to switch over right at 1:06, but rather somewhere in the middle of the segment, then yes, you can still bill them both. But you can’t charge two clients for work done simultaneously. (I shouldn’t have said it’s fraud – I think it should support an action for fraud, but I don’t know that it has. But it’s certainly unethical – see here, collecting cases.)

–Cliffy

Yeah, I’ll buy that. The place that seems to be the biggest grey area (or maybe it’s not gray, just abused), is court time. If you go to a court call and have three cases up and are gone for an hour, do you bill each client an hour, each client .3, or something in between? I think it should probably be .3 each, but I’ve honestly never seen anyone bill it that way.

I don’t know if this is still common practice, but about 15 years back, there was quite a flap in the Washington Post about lawyers double-billing. The specific example was a lawyer travelling for client A, and billing A for travel time. While travelling (on the airplane, for example), he would then work on paperwork for client B - billing client B for the work as well.

One cite mentioning this:
http://www.californiaappeals.com/lawyer/Boo_to_Billable_Hours_Chapter_10_double-billing.html

That’s my experience, as well. My office represents banks in creditor litigation; most of our work is based on a flat fee, and additional tasks have been “normalized” for a pre-set fee arrangement (i.e. preparation and attendance at a hearing is billed at 2 hours, at $150.00 an hour).

As a result, I don’t have to account for my time, but I do bill for the work I (assisted by the staff) produce. Since the billing for the production is pre-determined, it often runs way over the 9 or 10 hours I spent in the office.

One other note on this: we, for example, may have been approved to bill 3 hours for researching, writing, and filing a particular motion. If we then use that same motion in another case, changing only the names of the parties, we still bill the same 3 hours.

I’d be interested if the lawyers who do bill hourly use the same technique. If it took you 3 hours the first time you wrote the motion, do you get to bill 3 hours the next time you used the motion, when you only spent a few minutes fixing the names and hitting print?