The Attorney Billing Cheat Sheet (2024)

lawyer billing for time
Accurate billing not only ensures attorneys are fairly compensated for their work, but it also plays a key role in maintaining a healthy attorney-client relationship.

Billing clients is a critical aspect of an attorney’s role, not just for the obvious reason of revenue generation, but also for demonstrating the value of their services, ensuring transparency, managing resources effectively, and fulfilling professional obligations. Accurate billing not only ensures attorneys are fairly compensated for their work, but it also plays a key role in maintaining a healthy attorney-client relationship.

How to Bill Time Appropriately at Your Firm

Appropriate billing is vital for attorneys as it fosters trust, showcases professionalism, and averts fee disputes, while ensuring clients perceive the value of the services rendered. Attorneys can employ different billing styles such as hourly, flat fee, or contingency, depending on the case and client preferences. In essence, correct and versatile billing is key to a productive attorney-client relationship. Let’s take a look at how to bill your clients appropriately.

When Hourly Billing Makes Sense:

In hourly billing, law firms charge clients based on time spent on a case. This method is common where the duration of a case is uncertain, ensuring that the firm’s effort is fully compensated and the client is not overcharged for swift resolutions.

Hourly billing is often employed given the unpredictable nature of matters like:

  • Family Law
  • Probate Law
  • Civil Litigation
  • Business Law

For those engaging in time-based billing, accurate time tracking is indispensable. Neglected billable hours result in profit loss, unclaimed work, and weekly reconciliation frustrations.

Automatic time-tracking systems alleviate these issues by contemporaneously tracking all time spent on a case, eliminating the need for manual record-keeping.

When to Implement Fixed Rate Billing:

Fixed rate or flat fee agreements are prevalent in transactional areas of law like: 

  • Real Estate 
  • Estate Planning
  • Bankruptcy 

These areas often follow predictable procedures, enabling attorneys to estimate the effort required and bill accordingly. Having accurate data is crucial for setting appropriate fees. Without knowledge of the time spent on different tasks, firms risk setting rates based on intuition or competitors’ charges, rather than what’s profitable and fair. Automatic time tracking can help collect necessary data for setting appropriate rates. By accurately tracking time spent on various tasks and using that information to calculate fixed fees, attorneys can confidently set their charges.

When to Use Contingency Billing:

Contingency billing, where law firms receive a case settlement percentage, can yield high earnings but also risks nonpayment for unsuccessful cases. Common in areas of practice such as:

  • Personal Injury
  • Workers’ Compensation
  • Employment Law 

Contingency billing appeals to clients wary of investing in uncertain cases, but mandates careful case selection by law firms. For contingency-based billers, historical reporting is essential for informed decision-making on potential cases. Reporting tools allow profitability analysis by matter type and fee earner, using real-time legal software data. Regardless of the billing method, optimizing the billing process can enhance revenue without overcharging, crucial for a successful, reputable law practice.

CARET Legal time entries

Easily convert tasks and activities to time entries with CARET Legal

How to Bill Time Efficiently at Your Firm

Efficient billing streamlines administrative tasks, ensures timely invoicing for steady cash flow, and reduces potential disputes, leading to a smoother attorney-client relationship. Ultimately, efficient billing benefits both the attorney’s practice and the client’s experience.

 Let’s explore a few key areas to keep in mind to maximize your billing efficiency.

Improve Time Tracking Using Software

Automatic timekeeping tools enable easy tracking of billable time during client communication and real-time task recording. Lawyers often bill only for larger tasks, neglecting smaller ones like email responses or phone calls. However, all time spent on a case warrants billing – diligently and accurately. Accurate billing requires precise timekeeping. If a document is worked on, the bill should specify it. If research is conducted, the subject should be indicated. Practice management software with legal billing and standardized invoice capabilities can facilitate this process.

Efficient billing streamlines administrative tasks, ensures timely invoicing for steady cash flow, and reduces potential disputes, leading to a smoother attorney-client relationship.

Monitor Performance

The monitoring of firm performance plays a pivotal role in enhancing efficiency in billing. By keeping a keen eye on how time is being utilized, areas of inefficiency can be identified and subsequently addressed. This not only ensures that all billable hours are accurately accounted for, but it can also spotlight areas where additional training or resources may be required. 

The transparency provided by clear, detailed billing fosters a sense of trust between the firm and its clients. Prompt and accurate invoicing also serves to enhance the firm’s reputation for professionalism. By capitalizing on the available tools and maintaining a focus on performance monitoring, you can create a billing process that maximizes your firm’s potential. Resulting in a more productive work environment for your employees and a more satisfactory experience for your clients.

Consistent Invoicing

Prompt payment isn’t luck but results from consistent invoicing, issue-free billing, valued services, and strong client relationships. Automate your billing process to send bills monthly at a consistent time, allowing for attorney or manager invoice review before sending. Specify and detail hourly rates for attorneys, paralegals, law clerks, and other professionals. If full monthly payment is expected, state this clearly upfront. The fee agreement is an opportunity to set client billing expectations, preventing surprises. Your fee agreement should clearly outline payment procedures, requirements, and delinquency handling. Regular invoices for legal services performed and expenses advanced should be expected as long as you provide legal services.

bulk billing center in CARET Legal

CARET Legal bulk billing simplifies the invoice process

You Don’t Need an Attorney Billing Cheat Sheet with a Legal Practice Management Software

Accurate billing is a linchpin in growing a firm’s profit margins, maintaining client relations, showcasing service value, optimizing resource use, and upholding professional standards. When you’re ready to ditch the attorney billing cheat sheet and move to a solution that doesn’t require you to have one — we’re ready. 

Contact CARET Legal today for a free demo or start a free trial.

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