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Law Firm – Charging the Client

published March 06, 2013

By Author - LawCrossing
Published By
( 17 votes, average: 4.7 out of 5)
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.
If you're perfect, crazy, and positioned, probably the most important other thing to think about is the sheer quantity of work you do. Your firm charges an hourly billing rate for your time, and it's a lot more than they're paying you per hour, which means that they make money off you.

The first thing to know is that the firm can't charge the client if it can't prove you did the work. That proof requires written records. Thus, they tell you that, as they know, there will be times when your brain turns to mush and you waste many hours needlessly. Despite your shame for being so stupid, they say, you must resist your conscience and avoid the temptation to charge the client for fewer hours. "We're only human," the firm suddenly admits, "and if we hadn't made these mistakes, someone else would have. It was all part of trying to do the job, and we charge for that."

In most cases, the firm assumes that you will do a lot of high-quality work each hour, so the real concern is with how many hours you work. Or, more accurately, not how many hours you work, but how many hours you bill to the client.

As this concern grows on you, you may change your accounting techniques. At first, for example, you might have kept track of each hour as you went along, charging the client only for those moments in which you felt productive. Once you become more sophisticated, however, you may simply sit back at the end of the day and subtract those few large chunks of goof-off time that you clearly remember taking. Memory being what it is, this change in technique can easily add an hour or more of billable time to each work day.

Naturally, you work at home or on the train as well as in the office, and you can bill for that. You can bill for putting your feet up and thinking about the client's situation. You can even bill for worrying about the client's problem while you're taking a shower, as long as it's high-quality worrying.

Creative billing is an art. You may have heard about the attorney who dies and goes to heaven. At the Pearly Gates, he tells St. Peter that he's only 38 years old, and that he's much too young to die. St. Peter pulls out some documents and says, "That can't be right. Judging from the number of hours you've billed your clients, you must be at least 75!"

Unbeknownst to many, though, there's nothing unrealistic about an attorney being at the office for, say, 10 hours, and yet billing for 15. It probably won't happen every day, but it can happen, for several different reasons. First, consider this advice from the ABA Journal:

[Let's say that] Client A calls and asks for information that requires one hour of research time. Therefore, Client A is billed for one hour .The next day, Client B calls and needs the same information. Client B should be billed for the same amount as Client A. There is value in the information [itself not merely in the work that was needed to produce it]

Also, a client should be billed at least the minimum (smallest increment) amount of time for short phone calls. This will take into account the "interruption" time of any other matter being worked on.

At one firm where I worked, the policy was to bill in quarter-hour increments. I thus had the experience of seeing some attorneys charge the client a quarter-hour of time for the two-minute exercise of calling the client's office, being told that the client was not in his/her office, and asking the client's secretary to have the client return the call.

There's also "double billing." This happens, for instance, when your client requires you to fly someplace. Since you didn't prefer to be on that flight, you bill the client for it, even though you may not be working during the flight. But if you do decide to work - preferably for someone else, so that you don't have to deal with nasty questions when the client reviews the bill - well, then, you can bill the other client too. Presto! A four-hour flight produces seven or eight hours of billings. It's even better if you're working around the clock and flying to the West Coast, so that your 24-hour day produces, at the very least, 27 hours of billings.

After you're done with billing your hours creatively, the firm may add its own touch to the dollars. If the client is ecstatic about what the firm has accomplished, the billing partner may take advantage of the client's apparent eagerness to pay by applying "premium billing." In one form, this consists of simply doubling the attorneys' ordinary hourly billing rates. (Since I didn't work in litigation, I don't get to tell you how happy the firm can be with contingency billing, in which they charge a flat 33 percent or 40 percent or more of the "take.")

But, as an associate, you don't worry much about the dollars. You just keep putting in the hours. Associates at most major firms are now expected to bill between 2,000 and 2,500 hours per year. That's not usually put into writing, and it's possible to get away with less for a while. But neither is it the ceiling. I've known attorneys who have billed well more than 3,000 hours in a single year, and, according to legend, the garrulous one topped 3,500.

If you assume four weeks of vacation per year, and divide 2,000 hours by 48 weeks, you get an average of about 42 billable hours per week. If it's 2,500 hours, then the figure rises to 52 hours. That's eight to 10 hours a day, five days a week. It doesn't sound too hard.

You have to adjust that figure; however, to account for the spells of reduced work that happens during economic slowdowns and during the summer vacation months. Despite the lack of work on those days, you still have to be in the office, even if you're just sitting around reading law books. When the busy days return, you'll have to bill quite a bit more than eight or 10 hours a day if you're going to catch up with the target of 2,000 to 2,500 hours for the year.

Then, too, some hours won't be billable. It depends on the work at hand and your work habits, but by the time you include breaks (which you must have to avoid going batty) and important non-billable tasks (e.g., meetings to discuss firm policies, or interviewing potential new attorneys), you may well average several non-billable hours each day.

And no matter how many hours you're billing, some of them can't come between 9 a.m. and 5 p.m. You have emergency projects, last-minute demands by unreasonable attorneys and clients, trips to the printer, and all sorts of other required nighttime and weekend activities. It's not unusual to see associates work all day, work all night, and then work all the next day; a few even manage to go on for yet another night. When the work comes in, you have to do it.

Personally, I could usually work until somewhere between 2 a.m. and 5 a.m., but then I had to get a couple of hours of sleep or else I just couldn't function the next day. Unlike some firms, mine didn't have cots and showers for this purpose. There was a little storage room with a black vinyl couch in it, but it had no ventilation, and anyway it was full of wobbly stacks of empty cardboard boxes that kept falling on me while I slept. A couple of partners had couches, which I'd be tempted to call loveseats if it weren't for their locations, but they were too small to sleep on. So I would just stretch out, in my suit, on the floor of my office, with my Brooks Brothers coat as a blanket in the winter. One night, however, a security guard walked in with a flashlight and stepped on me in the dark. After that, I took to sleeping underneath a table.

published March 06, 2013

By Author - LawCrossing
( 17 votes, average: 4.7 out of 5)
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.