Licensed to bill: Give billing the attention it deserves

In the middle of the calendar year, billing issues can be low on the list of an attorney's priorities. The demands of providing legal services, developing business, and dealing with other tasks can take precedence, as attorneys instead relegate the collection of outstanding billings and fees as an "end of year" task. However, attorneys who ignore billing problems when they arise not only make things harder on themselves in collecting fees, but also can risk breaching their ethical obligations to clients.

Indeed, advising clients of issues relating to billing can be viewed as simply another aspect of an attorney's obligation to keep clients informed under applicable ethical rules. In particular, in addition to the duty to communicate set forth in Rule 1.4 of the California Rules of Professional Conduct, Business and Professions Code Section 6068(m) provides that an attorney's duties include "[t]o respond promptly to reasonable status inquiries of clients and to keep clients reasonably informed of significant developments in matters with regard to which the attorney has agreed to provide legal services."

In addition to that general obligation to communicate with clients, as discussed below California is one of several jurisdictions that in fact requires clients to provide billing statements within a certain time period if requested by a client. Accordingly, an attorney that fails to pay proper attention to billing issues can incur unnecessary and easily avoidable risk. Below are some tips for billing effectively.

Bill Contemporaneously

Attorneys with a busy schedule and a long task list may feel that they simply do not have the time to complete time entries immediately after finishing a particular task. However, when compared with attempting to recreate accurate time entries days or weeks later, completing time entries contemporaneously not only is much more efficient but also avoids the potential for under-billing that can occur when tasks are forgotten. At the same time, an over-estimate regarding the time required to complete a task can compromise the accuracy of the bill. Of course, all time entered should be an honest and accurate reflection of the nature of the task and the time it took to complete.

While traditionalists may still prefer paper timekeeping logs, attorneys and law firms also commonly use matter-management software to record and track billable time. These electronic resources can include built-in timers, which help attorneys document their time to the tenth of the hour, the ability to store and auto-populate frequently used descriptors, tasks, matters, and clients, and readily available information regarding billing data, trends, and invoices. Such programs can greatly reduce the time required to complete time entries.

To help ensure timely billing, law practices can require their attorneys to enter their time on a regular basis, be it weekly, monthly, or even daily. Some law firms may even penalize attorneys financially for failure to comply with the internally-set deadline.

Be Descriptive

When done properly, billing entries can act as a method of communicating with clients about the work being performed on a matter. In some situations, a client may not fully appreciate the important work that its lawyer is doing, even where the client has discussed or approved of a strategy in advance. Vague billing entries add little clarity to the scope of work performed. Instead, they can lead to misunderstandings or significant problems that compound over time. As a result, if billing entries are not sufficiently descriptive or helpful, clients may question whether the sum of legal fees is worth the services that were rendered -- and for good reason.

Business and Professions Code Section 6148 in fact requires that "[a]ll bills rendered by an attorney to a client shall clearly state the basis thereof." Thus, by not including sufficient detail, attorneys may violate the applicable standard.

Moreover, detailed billing entries serve beneficial purposes for both client and lawyer. Not only do they convey in clear terms all of the work that was performed, but they can reflect client consent for a host of tasks, remind the client of a particular course of action, minimize or help resolve billing disputes should they arise, and serve as a defense to a malpractice claim.

Issue Bills Regularly

While the element of surprise might be strategically beneficial in an adversarial representation, it is rarely advisable in a client representation. Attorneys usually have better success in collecting fees from clients when those clients are not surprised as to the amount of or justification for the bill. Indeed, a client that receives a single bill at the end of a representation may result in "sticker shock" and cause the client to question whether the work performed was really necessary (particularly if the matter took a different direction than expected or where the final result was less than optimal).

Another potential risk occurs when an attorney sends out billing invoices erratically over long periods of time. From the client's perspective, this irregularity creates a sense of unpredictability, which may result in later problems that could increase the likelihood of a Bar complaint or malpractice claim.

For lawyers and law practices that want to avoid raising any eyebrows, billing invoices are generally sent monthly, although some clients may request bills on a quarterly or different basis. Business and Professions Code Section 6148 also addresses the timeliness of bills, as it provides that "upon request by the client, the attorney shall provide a bill to the client no later than 10 days following the request unless the attorney has provided a bill to the client within 31 days prior to the request, in which case the attorney may provide a bill to the client no later than 31 days following the date the most recent bill was provided." Thus, where requested by the client, the law creates an obligation to provide at least monthly bills.

Apart from the financial benefits of regular billing and the potential need to comply with the law, good billing habits help create a healthy relationship with clients. When bills are accurate, descriptive, and sent on a regular basis, it allows both the client and lawyer to focus on the legal services without distractions.