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Tips for Improving Your Legal Billing Guidelines- Part II

A good legal spend management program begins with a strong set of billing guidelines.

Law firms, especially large firms, have timekeepers who bill to multiple clients, each with their own unique set of billing requirements. Due to the multitude of guidelines that the firm needs to follow, it is important to present your guidelines to a firm at the onset of the relationship so the firm will have an excellent understanding of your expectations.

This blog post outlines some tips for improving your billing guidelines in 7 areas:  tasks per entry, billing frequency, task descriptions, overhead, research, staffing, and travel.  Part I of this post focused on task per entry, billing frequency, and task descriptions.  Now we will review how to improve your billing guidelines regarding overhead, research, staffing issues, and travel.

• Overhead
The hourly rates submitted by a law firm include overhead expenses. Billing entries should not include charges such as office supplies, library staff, proofreading documents, preparation of bills and invoices, or filing or e-filing documents with the Court. Even if an associate or paralegal bills an activity that can be performed by a secretary, file clerk, or other nonprofessional staff member, the task should be considered part of the firm’s hourly rate and the charge should be denied.

• Research
Many clients have a limit of 4 hours on research entries.  Any billing entry above 4 hours will not be reimbursed unless there is prior approval of the client. Entries describing legal research should indicate the subject matter of the research and its purpose. For example, “research statute of limitations for motion to dismiss.” Additionally, if a topic is presumably familiar to an experienced counsel (items such as rules of procedure and evidence, or elements of common causes of action, etc.) research on such a topic should be questioned.

• Staffing Issues
The majority of clients are concerned about keeping staffing levels to a minimum. Some billing guidelines even go so far as to limit each matter to 1 partner, 1 associate, and 1 paralegal unless there is prior approval by the client.  Overstaffing could appear in an invoice as duplication of effort (same person performs same task, different person performs same task as another biller). An invoice may also show excessive intra-office conferencing. Those billers with material responsibility for the case should bill for attendance at an intra-office conference and they should be limited to necessary strategy sessions related to events in litigation.

Other staffing issues include:

Multiple attendance at meetings, depositions, and court date- Attendance at events should be limited to those timekeepers who are making a significant contribution to the proceeding.

Orientation for billers- This includes situations where a new attorney starts on a case or when giving education or administrative direction to the staff.

Billing at associate rates for paralegal activities- Activities such as “preparation of routine notices” whether the task is performed by an associate or a paralegal, is a paralegal activity which should be billed at a paralegal rate, regardless of the timekeeper’s position. Similarly, tasks that could be performed by an associate should not be compensated at a partner rate.

• Travel
Travel time is another area that is often questioned. Companies handle reimbursement for travel time in various ways. Regardless of how a company reimburses travel, it should be addressed in the guidelines in order to set expectations for the law firm. Often, a company agrees to pay full hourly rates for travel as long as the attorney is working on company matters. If the attorney is not working on company matters, they will pay 50% of agreed hourly rates. Other companies work with thresholds. For example, anything under a certain amount of hours or miles is billed at a full rate and anything over is billed at ½ rate.

These areas are just a few of the ways to improve your billing guidelines. The most important thing to remember is to continue to enforce your guidelines with law firms. This will work to create adherence within your law firms. Finally, don’t be afraid to revise your guidelines.  If you are using a third-party bill review provider or if you are reviewing invoices in-house, make sure to track the categories of billing violations. This will assist you in identifying where your guidelines are strong and where there is room for improvement.

For more information about how to improve your billing guidelines in order to more effectively manage your legal spend, contact Stuart Maue at: 1-800-291-9940 or e-mail: info@smmj.com

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