The dreaded ‘B’ word

Time has always been money in the business world. As a new lawyer, it doesn’t take long to realize precisely how true this statement is.

I didn’t take a course in law school called “Billing 101.” Even if such a course had been offered as an option, I likely would have passed it over in favour of something much more interesting. In retrospect, considering the notions of the “billable hour” and “fee for service” in an academic setting may have been a useful exercise.

It is only reasonable that clients want to know how much a given legal service is going to cost before undertaking to have the service performed. This expectation is more than reasonable. The problem arises, however, when one considers the level of uncertainty typically present in a legal matter — whether it is a litigation, commercial, or family law matter.

It is nearly impossible to tell a client what his or her legal bill is going to be with any level of certainty. All we, as lawyers, can do is use our time and clients’ money smartly and keep them updated at every step of the way.

While it’s obvious that billing clients for time that was not well-spent on their matter is unfair, so too are associates blindly writing off our time spent moving a matter forward.  Clients retain lawyers to perform legal services they themselves are unable to perform. This is clearly worth value.

One must consider the economics of a law firm. Associates’ work is a revenue stream. It is not free for us to work for the firm that pays for our office space, the research resources we use, disbursements, and various other overhead costs. Even though most firms do not charge their associates for the use of these resources, they are ultimately owed by the associate.

Additionally, last month, I wrote about the advantages of having a lower hourly rate as a new associate. The downside to being “green behind the ears” is you are less efficient and knowledgeable than those with decades of experience. The good news is you are not expected to be. Hence we are not billed out at the same rate as that experienced lawyer.

We may not ultimately know how long a specific task ought to take us and, therefore, we may be quick to shave time off an invoice based only on the final number at the bottom of the page. But we should first be asking ourselves a few questions: How successful were we in reaching the client’s stated goal? How much work was required? Was the work necessary?

What ultimately seems fair to the billing lawyer is not always going to be perceived the same way by the client. For this reason we must take the time to ensure we are properly detailing the work being done on the client’s behalf even though this practice may sometimes feel like it should be a billable exercise in itself. Clearly it isn’t.

Ultimately the practice of billing comes down to fairness — fairness to the client, to the firm, and to ourselves. While the billable hour has been categorized by some as archaic, few flawless alternatives have been found — at least in my opinion.

At the end of the day, clients need to receive value for their money. Law firms need to be able to recoup the money they spend to employ us, whatever the arrangement may be. We may not have all gone to law school to become master billers, but, whether we like it or not, we are business people and the art of billing is a crucial skill.

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