PA 305 Law Office ManagementUnit 6 Seminar

Billable Hours

Written Assignment – Part 1You are a paralegal in a large law firm, and you have had a hectic day.  You are trying to recreate your time and insert it into your time sheet.  All of these client matters are handled on an hourly basis. Here are your notes:

Johnson Divorce 2.0 hours Finalized Petition for DivorceRose Williams Spoke with client about bringing in documentation related to her husband’s estate; began preparation of Application for Appointment as Executor.  1.5 hoursFirm meeting 40 minutes.Lunch 1 hourRusty Harris personal injury lawsuit Continued review of documents produced by employer and trucking company in discovery 3 hours and 10 minutesMark Smith child custody dispute Reviewed report of Guardian Ad Litem and prepared memo to supervising attorney regarding conclusions 50 minutes

In this assignment, you will create your time sheet.  Remember to track your time in 10 minute intervals and record your time in decimal format (1.5 hours, for example).

Written Assignment – Part 1You are a paralegal in a large law firm, and you have had a hectic day.  You are trying to recreate your time and insert it into your time sheet.  All of these client matters are handled on an hourly basis. Here are your notes:

Johnson Divorce 2.0 hours Finalized Petition for DivorceRose Williams Spoke with client about bringing in documentation related to her husband’s estate; began preparation of Application for Appointment as Executor.  1.5 hoursFirm meeting 40 minutes.Lunch 1 hourRusty Harris personal injury lawsuit Continued review of documents produced by employer and trucking company in discovery 3 hours and 10 minutesMark Smith child custody dispute Reviewed report of Guardian Ad Litem and prepared memo to supervising attorney regarding conclusions 50 minutes

In this assignment, you will create your time sheet.  Remember to track your time in 10 minute intervals and record your time in decimal format (1.5 hours, for example).

Written Assignment – Part 110-minute intervals, decimal format:

At 1:37pm you take a phone call from a client. You hang up at 1:52. You spent 15 minutes on the phone.There are two ways to calculate this:

1: 15 minutes in decimal format is 15/60 = .25 hour2: 15 minutes is rounded up or down to the nearest 10

minute interval. Many firms always round up, so 15 minutes would be recorded as 20/60 = .3 hour

Written Assignment – Part 2As a paralegal, your time on family law matters is billed out at $60 per hour.  For all other matters, your time is billed out at $75 dollars per hour.  In a brief summary, calculate the fees you generated on the client matters set out above. For example, in your time sheet you might add a column for “Fee” and insert the amount of the fee there.  Thus, if you worked 1 hour at $60 per hour, the recorded fee for your time would be $60.

Sample

DATE MATTER B N FEE

2/7/2011 Research - Jones v Smith #10-123 2.5   $ 162.50

2/7/2011 Staff Meeting   1.5  

2/7/2011 Lunch - Jason Smith #10-123 2   $ 130.00

2/8/2011 Initial meeting, Robert Wesley 2    

         

         

         

         

         

TOTAL   6.5 1.5 $ 292.50

SAMPLEDATE MATTER B N FEE

2/7/2011 Research - Jones v Smith #10-123 2.5   $ 162.50

2/7/2011 Staff Meeting   1.5  

2/7/2011 Lunch - Jason Smith #10-123 2   $ 130.00

2/8/2011 Initial meeting, Robert Wesley 2    

         

         

         

         

         

TOTAL   6.5   1.5 $ 292.50

Timekeeping vs. Billing

timekeeping

The process of tracking time for the purpose of billing clients.

billing

The process of issuing invoices for the purpose of collecting monies for legal services performed and being reimbursed for expenses.

Timekeeping vs BillingNot all billable time is billed to the client!

Your supervising attorney is working on a divorce case. The client owns some real estate in a different state. In December, you spent 12 hours doing some research and preparing a detailed memorandum of law for the attorney, regarding real estate law in that state. The client was billed for the 12 hours on the January 2 statement. Yesterday your lawyer told you that she can’t find the memo. At year end, all completed research files, including your memo, were backed up to the firm’s off-site data storage server. Unfortunately, the memo file is corrupted and cannot be restored. Following firm “paperless” protocol, you didn’t keep a hard copy. The attorney tells you she needs you to re-create the memo. You spend 6 hours doing so, because you are able to find some of your research and thus save some time. Is the 6 hours Billable Time?

Timekeeping vs Billing

YES! You spent 6 hours doing research for a client’s case, as directed by your supervising attorney.

BUT…is the 6 hours of billable time chargeable to the client?

NO. To charge the client for the additional 6 hours would result in double billing for the research. The reason for the time spent on additional research is an administrative matter. So although you would report 6 hours billable to the client, the hours would not be billed to the client.

Timekeeping vs Billing

When a Chicago-based law firm submitted its bill, the client company suspected something might have been wrong. Years later, an audit revealed that the invoice included nontechnical deposition summaries by paralegals, charged at four to five pages per hour. The usual rate, however, is 20 to 25 pages an hour. The paralegals were apparently working at 20 to 25 percent of the normal rate, so the client company was being billed four times what it should have been for that service.

Timekeeping vs BillingA federal grand jury indicted two men for allegedly conspiring to defraud an insurance company by having tens of thousands of dollars in checks issued for expenses and legal services that were never provided. The defendants were a former litigation supervisor for the insurance company and a former partner in the law firm representing the company. The grand jury indicted them on 1 felony count of conspiracy, 3 felony counts of mail fraud, and 20 felony counts of wire fraud as a result of checks written over four years.

Timekeeping vs BillingWhy is this distinction important to you, the paralegal?

Most law firms measure productivity in terms of billable hours. Attorneys and paralegals may be required to report a minimum number of billable hours annually, as a condition of employment. Failure to generate sufficient billable hours could result in negative annual review, or even loss of one’s job. Your text indicates that a recent survey of legal assistants found that legal assistants were most often expected to bill between 26 and 40 hours a week (1,352 and 2,080 annually).

But that is only one factor. Legal professionals expend thousands of hours of time performing important tasks for clients, that for a variety of reasons cannot be billed to the client.

Timekeeping vs BillingEXAMPLE 1

Imagine you have just graduated from Kaplan. You are hired by a law firm that specializes in Patent litigation. But you have no experience in this area – the firm hired you as an “entry level” position, and your first 6 months will be spent learning on the job.

After shadowing an experienced paralegal for 4 weeks, your supervisor decides you are ready to prepare a patent infringement petition on your own. Although you are confident you understand the process, because you are inexperienced, you spend 5 hours drafting the petition and necessary attachments. A more experienced paralegal would have spent, on average, 2 hours drafting the petition and related documents. How much is billable time, and how much should the client be billed?

Timekeeping vs BillingThe answer will, of course, depend upon the firm’s internal billing protocol. But in general, the answer is that:

You will report 5 billable hours working on the matter

The firm will bill the client for only a portion of the time. Because the average time an experienced paralegal would have spent is 2 hours, the firm may bill only 2 hours. But averages are just that! It might be reasonable for the firm to bill the client for more or less time, depending upon the complexity of the specific matter. In most cases, you will not even know how much time was billed to the client…the person responsible for client billing will make that decision, based on established firm protocol.

Timekeeping vs BillingEXAMPLE 2

You work for a solo practitioner, who has a broad general practice. One of her clients is a wealthy local businessman who has been a loyal client for many years, and uses the firm for all of his personal and business legal needs.

Last week, the client came in to discuss a codicil to his Will. After meeting with the attorney, it is decided to simply draft a new Will. The attorney gives you complete instructions regarding the new Will, and you spend 3 hours drafting it, using the firm’s Will Form file. The attorney spends an hour reviewing it and marking some necessary changes, which you make. Making the corrections, printing, and assembling the new Will takes you 45 minutes.

You have spent 3.75 hours, and the attorney has spent 1 hour, on this matter, and that is the amount of billable time reported. But the attorney tells the bookkeeper not to bill the client, as a goodwill gesture in appreciation of his continued business.

Timekeeping vs BillingKnow What Your Firm Expects!

Many firms expect staff to report a minimum number of billable hours, but as we have discussed, there are many hours of work that cannot be billed to the client. Each firm has rules regarding how to show this time, and whether it “counts” toward the minimum billable hours requirement.

It may be your responsibility to inform your supervising attorney, or your manager, if you feel that you are being asked to perform too many non-chargeable and non billable tasks.

How to Calculate HoursSome firms use quarter hour intervals; others 10-minute intervals.

Some firms bill a minimum time period, for example a quarter hour; others bill actual time in appropriate intervals. But rounding is nearly always necessary.

Some firms round down if under ½ hour, up if over; others round according to the interval; still others always round up.

There is no correct standard – as long as the method is fair and equitable, it will likely not be cause for client complaint.

How to Calculate Hours10-minute intervals, up rounding

127 minutes = 2.2 hours

120 = 2 hr; 7 min rounded up = 10; 10/60 = 0.16, rounded up = 0.2

15-minute interval, round to nearest

127 minutes = 2 hours

120 = 2 hr; 7 rounds down to 0

15-minute interval, round up to nearest

127 minutes = 2.25 hours

120 = 2 hr; 7 rounds up to 15; 15/60 = 0.25

How to Calculate Hours10-minute intervals, up rounding, no minimum

7 minutes = 0.2 hours

7 min rounded up = 10; 10/60 = 0.16, rounded up = 0.2

15-minute interval, round to nearest, quarter hour minimum

7 minutes = 0.25 hours

7 rounds down to 0, but .25 is the minimum

15-minute interval, round up to nearest, quarter hour minimum

7 minutes = 0.25 hours

7 rounds up to 15; 15/60 = 0.25