The Case for Better Management of the Billable Hour

For lawyers, tracking and billing time is a way of life. But for the client/lawyer relationship, the billable hour can become a burden or even an obstacle. Yet despite recent outcries for reform, the billable hour remains entrenched and the barriers to change are formidable.

Charging by the hour

Most law firm attorneys have billable hour requirements or expectations ranging from 1700 to 2100 or more, which can place tremendous pressure on the attorney to produce. LPO who is only measured by the number of hours recorded may not be rewarded for dealing with matters more efficiently or bringing special skills or specific relevant experience to the matter. And, while billable hours offer a simple and familiar means of calculating fees, the system ignores whether the lawyer’s work actually furthers the client’s interests.

Being charged by the hour

On the other side of the coin, the billable hour model presents different challenges to the client. Lawyers who bill on an hourly basis have limited incentives to engage in case planning and project management. Therefore, clients run the risk of having to pay for inefficient lawyering or sometimes aggressive time recording. More importantly, billing methods based on billable hours provide clients with little or no predictability about cost. Clients have no capacity to verify whether the Legal Process Outsourcing rendered were necessary and performed efficiently.

Better billable hour management

For many lawyers, the solution is to manage billable hours through sound practice management and diligent project management. Here are some best practices:

• First and foremost abide by the client's billing guidelines. Client guidelines typically include whether the client requires entries to be coded, whether the client will pay for out-of-pocket expenses, or what types of administrative tasks that the client will not pay for. Ignoring guidelines will be viewed as poor client service and will raise the level of scrutiny on all future bills.
• Carefully track all hours worked in order to fully understand how your time is spent. A best practice is to enter your time the moment you complete a task and be descriptive in your time entries. Precise time tracking will improve overall efficiency, and will allow you to demonstrate your value to the client.
• Use best-of-breed software to manage case and matter details and capture, classify and record hours worked. By utilizing advanced tools for tracking and recording time, lawyers can help improve their utilization rates and make more informed, proactive decisions about how they allocate time. There is a number of legal software providers who offer cloud-based, secure solutions designed for legal practice management.

A properly managed billable hour system supported by technology will allow the client an opportunity for transparency of work, and to evaluate its worth and, if needed, to challenge the relationship of time, task and cost.

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