You want to make a lawyer cringe? Just bring up the topic of billing reports. Not only are they connected to the sensitive issue of hourly vs. fixed fee billing, but they are also simply annoying to write and read.
Billing Reports: A conflict of interests
At law firms, billing reports mean that lawyers are left scrambling at the end of the month to puzzle together what exactly they did in each 10 minute increment over the preceding 720 hours. Even worse, since you can’t bill for billing (or at least you shouldn’t), lawyers want to spend as little time and effort on this process as possible. Due to these discouraging circumstances, many billing reports are filled with insightful tidbits like “reviewed file” and “discussed matter”.
On the client side, these vague billing descriptions create all sorts of problems. For example, when management asks the in-house team to report on the status of a legal matter, the in-house lawyers cannot rely on such billing reports to provide management with any useful details. Instead, they have to contact their lawyers for a status summary (and risk getting billed for this too). Further, in-house counsel are also frustrated because generalized descriptions provide little help with tracking the status and, more importantly, the growing costs of the matter.
Due to the above conflicting interests, it’s quite easy for tensions to boil over and result in damaging blow-ups. To help you avoid such blow-ups, you can learn in this article a few tips for better managing the billing report process. In particular, you will learn the following:
oFor in-house counsel, you will discover how to take control of the reporting process in order to ensure that you get the reports that you need.
oFor law firm lawyers, you will discover a trick for quickly converting overly-vague reports into specific client-friendly descriptions.
In-house Counsel: A description policy
If you want to ensure that you get sufficient information in your billing descriptions, you need to get on top of this issue at the outset of your engagement. In particular, you should ensure that the engagement documentation includes a policy identifying what billing details are unacceptable. For example, for litigation engagements, you could forbid the following types of general descriptions:
- Attention to matter
- Attention to file
- Review case and issues
- Conference with ‘so and so’
- Review correspondence
- Trial preparation
- Organize File
- Update strategy
- Motion work
- Work on project or case
- Work on file
- Prepare for meeting
- Work on discovery
- Receive/review documents
- Any other non-descript activity
(The above list comes from an RFP for a major US office supply company.)
Furthermore, you might also want to provide some insights on what should be included in the descriptions. For example, you could request that all billing descriptions for telephone conferences include (i) the purpose for the call and (ii) the names of all call participants. Such positive examples will better help external lawyers understand and meet your expectations.
Once you set such a policy, your work is only half done. If you want external lawyers to take your billing policy seriously, you must be ready to enforce it regularly. This means that you should send back bills that don’t match your expectations and request corrections. Although this approach is annoying and time-consuming at first, in the long run, the external lawyers should get the hint and provide you with the descriptions you need.
Law Firms: Leveraging matter summaries
If you are working at a law firm, you probably find it tiring to fill out billing reports because they oftentimes require you to recall long-forgotten details. In this case, you should try the following Matter Summary approach, because it can oftentimes help you save time and energy in recalling important details for your reports.
Step 1: Obtain a Matter Summary
As a first step, you need to find a summary of the specific matter. For litigators, this summary could be the client’s description of the factual background and a listing of the legal issues. For transactional attorneys, you are probably looking for the term sheet.
If necessary, you should modify this description to add the following important details:
- Names of Key Parties (both company names and individual names)
- Names of Primary Documentation (e.g. contracts or court filings)
- Summaries of any specific legal issues
Step 2: Prepare General Descriptions
When you need to prepare your billing reports, you should begin by quickly creating short, general descriptions. With this simplified approach, you can avoid getting bogged down in the details and focus on ensuring that all of your time is recorded.
Step 3: Modify with Matter Summary
Once you have recorded all your time, go back through and elaborate your general descriptions with relevant details from your Matter Summary. For example:
- General Description: “reviewed file regarding amendment”
- Relevant Details from Summary:
- Documentation: 3rd Amendment, dated X, between Companies Y and Z
- Issue: Insufficient execution by John Doe, managing director of Company Y
- Elaborated Description: “reviewed file regarding the 3rd Amendment, dated X, between Companies Y and Z with respect to the insufficient execution of John Doe, managing director of Company Y”
Although you are unlikely to find the above advice will turn the billing process into a pleasure-filled event, hopefully you will find the tips helpful in making the billing process a little more manageable.
Aaron M. Muhly is the founder of Evelaw — a legal skills training consultancy. Muhly has worked extensively with lawyers as both a Chicago lawyer and as a training consultant for law firms in Europe.