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Billing is the life blood of any law firm. Law firms provide services for which they bill. If clients pay the bills, and receipts from billing exceed the firm’s expenses, the firm is profitable. If bills are not properly sent, or if clients refuse to pay the bills as stated, the firm’s profitability is in jeopardy. Despite the central place of billing in the economic structure of a law firm, most law firms pay scant attention to formal training of junior lawyers in the basic principles of proper billing. For the junior lawyer, forced to learn billing by osmosis, the great likelihood is that mistakes and bad habits will develop, which may cause no small amount of anxiety, and even adversely affect a junior lawyer’s career development. WHY BILLING MATTERS Billing matters because it is objective. Every client, to some degree or other, measures the adequacy of legal services by what the services cost, not just in the abstract — hourly rate — but in the aggregate — how much it costs to close a deal, or to conclude a litigation. Senior lawyers, moreover, at least to some degree, measure junior lawyers by how many hours they bill, and how efficient they are. Other things being equal, a junior lawyer who bills 20 percent more hours than another junior lawyer is the more valuable. On the other hand, a junior lawyer who can do the same work in 20 percent less time than another junior lawyer is also more valuable because work is being done at a “bargain” price. No matter how these perhaps contradictory measures are evaluated, the point is that these are objective measures that law firms can and do use to evaluate their junior lawyers. Within the normal curve of operations, of course, hourly comparisons are meaningless. Two busy junior lawyers who finish the year with a difference of 10 billable hours between them are, unless some other factors apply, equally productive. Yet it is a mistake to assume that hours do not matter in a law firm, so long as you are a sufficiently talented lawyer. That may be true in a small fraction of cases, but for most lawyers, in most firms, hours do matter. Most law firms use some official or unofficial quota (also “target” or “guideline”) for annual hourly billing. You should learn what that number is, and then take steps to meet or well exceed that number. The first step is to do some rough calculation of the hours per day that you need to bill to meet the quota. Assume for simplicity’s sake that the quota is 2000 hours per year, that you take two weeks off each year for vacation, and that you usually work five days per week. Your daily target for billing is 2000 hours a year, divided by 50 weeks a year, which is 40 hours a week, divided by five days a week, which equals eight hours each day. That number could easily change by changing any of the components. For instance, you could raise or lower the annual quota, the number of vacation (and holiday) weeks you take or the number of days per week that you work. Any of those changes will change your daily target. The next step is to account for any major fluctuations in your daily hours, which could affect your performance. If you have an extended slow period, in which you consistently fail to meet your daily billing target, you may miss the annual quota, even though during some later period you are busier than normal. The point is that hours lost in one period must be made up in another. The final step is to order your life in a way that makes it possible to meet, or exceed, your target, within the bounds of how you prefer to work. Some lawyers are strictly 9-to-5 workers, who work productively all day and leave. Many others take frequent (unbillable) breaks throughout the day, and spend a good deal of time at the office “after hours.” Some come in very early, or stay very late, one day a week. Others take billable work home with them, and do it in the evenings or on weekends. Try to find a pattern that makes sense for your personal situation, and stick with it. Every law firm has some established system for keeping time. Generally, that system is explained in a law firm manual or one specifically dedicated to billing practices. The system, moreover, will most likely involve some form of electronic recording of time. Again, there is probably some manual explaining the electronic system. These documents are well worth reviewing. In addition to these firm-designed billing policies, keep in mind that some clients and matters may require special forms of billing. For example, bankruptcy matters are frequently accounted for with shorter time increments than may be used for other matters. Similarly, some clients, insurance companies for example, may require special recording of time using unique coding systems that permit easier data retrieval and comparison. ASK QUESTIONS If you have any questions about the billing systems, it is always preferable to ask someone rather than producing a large volume of time records that will require wholesale correction after a mistaken procedure is discovered. Indeed, the discovery of the mistake by a bill-reviewing partner may produce tremendous annoyance, which can be avoided with some basic preventive inquiry. It is also worth asking questions on some of the more subjective and variable elements of billing. Some firms (and some clients), for example, have strict rules about what constitutes unbillable time (such as travel time, time spent reviewing files, or time spent on establishing general familiarity with a subject matter). Often, however, such rules are not expressly stated, and bear asking questions of a supervising lawyer to get directions, before billing records are created. Generally, it is preferable to record time as activities occur, to ensure that time records are as accurate as possible. For that purpose, many attorneys use day planners, or daily notepads. Others input their time directly into a computer, or dictate into a recording machine. KEEP GOOD RECORDS Even if it is not possible to record activities precisely as they occur, it is highly desirable to have a regular, daily routine pursuant to which time records are created. Allowing unrecorded time to build up, in the course of a busy practice, is a bad habit that is too easily established. This bad habit can produce a vast array of adverse consequences: strain on your secretary when you attempt to create a month’s worth of time records at the end of a billing period; distraction from your own work when this long-neglected task is finally faced; and the great likelihood that mistakes will be made in the rush to complete records at the last minute. In that regard, it is important to build into your system an opportunity to review any time records created by your secretary. Just as you would not send out a letter without proofreading it, so, too, you should not finalize billing records without making sure that they are accurate and professional in appearance. Misspelling your client’s name in a billing record, for example, is a sure-fire way to suggest sloppiness and carelessness, hardly the hallmarks of a competent professional. Remember that billing records are a form of communication with the client. These records should make it easy for the client to understand what work was done. Entries like “research,” or “telephone conference,” for example, say nothing about the subject matter or purpose of such activities. Of course, it is also possible to say too much in a billing record. A run-on time entry explaining all of what transpired in a 15-minute conversation is an unnecessary waste of time. Find the balance between these extremes by asking yourself how much a client would need to know to have a basic understanding of what you were doing. ACCOUNT FOR ALL TIME In addition to creating records of time spent on billable matters, your time records should record the remainder of your professional time, including attention to office administration, training, business development, and pro bono work, among others. Law firms typically have a system for recording time in these various categories. Keeping accurate records of non-billable time will help you to review your own progress. Moreover, firm administrators are often keenly interested in the statistics that may be derived from such records. Finally, do not attempt to make your own judgments about whether the time you spent on a billable project was really as efficient as it might have been. If you worked for eight hours on a research project, but guess that you might have done the work in four hours, you should not record four hours, without checking with a supervising lawyer. Most law firms have a system to “write down” or “write off” inefficient work. Supervising lawyers need to make the judgment about what time should be modified, and should be in a position to tell a client how time records were modified. If you are concerned that some of your time may have been inefficiently spent, it is appropriate to mention that view to a supervising lawyer. That may not be the happiest conversation you will ever have. Yet, supervising lawyers generally understand that junior lawyers (especially lawyers fresh out of law school) may take longer to complete a task than more senior lawyers might do. The choice to use a less-experienced lawyer is theirs, not yours, and the decreased efficiency may be offset by your lower billing rate. Further, there may be occasion during the course of a project to bring to the attention of a supervising lawyer the fact that the project is taking longer than you originally anticipated. A check-in with the supervising lawyer can help to reassure you that the senior lawyer really does need to have you continue with the project, even though it may be proceeding more slowly than planned. Checking in, moreover, may also provide an opportunity to get some further advice from the supervising lawyer on how to complete the project more efficiently. CONCLUSION Learning to address billing issues in a forthright manner is part of the process of professional development. As with most things in a law firm, more communication is better than less. Ask questions, develop a system that works for you, and feed back problems to supervising lawyers, rather than waiting for small problems to become bigger headaches. Steven C. Bennett is a partner in the New York City offices of Jones, Day, Reavis & Pogue, and a co-coordinator of the New Associates Group in that office. The views expressed are solely those of the author, and should not be attributed to the author’s firm or its clients.

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