Underbilling? Not Recording Time? There’s No Excuse!

Over the years, I’ve heard my share of stories about attorneys who have failed to properly record their time. You know what I mean. Finishing a task and then intentionally recording less time than what you actually spent on the task. Or, alternatively, simply forgetting to enter your time (e.g., phone conversations in the car).

When first hearing these stories, my initial reaction was amazement. Why would anyone underbill? Clients have already agreed to pay for services by the hour. Is it asking too much to properly record that time when doing so directly affects the bottom line?

With so many things out of an attorney’s control affecting the bottom line, losing revenue because of unreported or under-reported time should not be one of them. Yet, when I expressed my reactions and thoughts, I received so-called justifications for the practice (or lack thereof).

Here’s my pushback on the common excuses I’ve heard to justify the insidious habit of underbilling.

“I Don’t Have the Time to Record Time Contemporaneously”

This is perhaps the most frequently heard explanation for under-reporting time. It’s also the most puzzling one. What is so difficult about capturing time with all the possible means to do so (computers, phones, and even pen and paper)?

Depending on the practice area, you’re talking about 10 to 20 minutes a day, at most, to accomplish a task that hardly taxes the mind. Lawyers probably spend that much time every day going to the bathroom — which similarly interrupts the workday. When was the last time you couldn’t find the time to do THAT? You’ll have a hard time convincing me that recording time is more inconvenient than that.

Then, of course, there are the consequences of failing to record time contemporaneously: as in, re-creating time. There are those who do it twice a day — at lunchtime and when leaving the office, or at the end of the day. But there are also those who record time at the end of the week, at the end of a month, or even at the end of a quarter. No one’s memory is that good to accurately re-create time.

Attorneys who guesstimate are either stealing from their clients or from themselves. And those who painstakingly go through email history or the like are wasting far more time than had they tracked it in the moment.

And don’t forget the time you spend checking and drafting emails at night or at home, or those client phone calls you took while watching your child’s soccer game. The office goes with us everywhere now and is a 24/7 operation. Billing habits are just one of the many things that lawyers have to adjust to in the new workplace reality.

“It Shouldn’t Have Taken This Long — the Client Will Never Pay”

The second most popular excuse for not billing for time, even when it is properly recorded, is fear. Fear that the client will be upset. Fear that the client will push back on a certain time charge. A good example? Taking an hour to draft an email, but then entering only a half-hour of time.

I have several ideas on how to deal with this fear.

Clarify Expectations

What makes you think that if the client sees it took you an hour to draft an email, the client will then somehow think that it should only have taken a half-hour? Clients have no idea how long the vast majority of tasks take. If the draft took that much time and the client knows that it is paying for your time, then the client should pay for the time. Why should you assume otherwise? Further, if your retainer agreement clearly states that you bill for time spent drafting emails, so much the better to clarify expectations.

Communicate Value to Prevent Underbilling

Sure, it may have taken a few hours to draft whatever, but the end product helped the matter along in such and such a way to the client’s benefit. Put the communication either in your time description or cover letter, or both. While on their face, our bills may indicate that we’re selling time, never forget that we’re selling value.

Communicate Often

If you see a certain project is taking more time than you think, give the client a heads-up before finishing the task. In a perfect world, a client should never be surprised by a bill. Seek permission, not forgiveness.

Charge for Learning Time

“How can I charge the client to get up to speed on the law in this area?” is rarely a good excuse to not charge unless you’re a newbie.

I once had a coaching client, a very experienced lawyer in a small town, who thought it unfair to charge a client for her time to learn a certain area, when many lawyers in major firms would be familiar with that same area and not need to charge to up to speed. What’s so unfair? Small-town practitioners cannot specialize as much as their big-city counterparts. However, there’s a tradeoff: Hourly rates are usually significantly lower.

If you compared the total bill for the big-city lawyer who is familiar with the area to the bill of the small-town lawyer who needed time to become familiar, it will very probably be a wash for the client. Again, explaining to the client beforehand that it may take time to get up to speed is not a cardinal-sin admission for a small-town lawyer. You can’t be expected to know everything off the top of your head.

It’s Your Responsibility to Bill Accurately and Reasonably

At the end of the day, clients expect and deserve to be billed accurately and reasonably. Shame on you if you cannot bill accurately. It shouldn’t be a big deal for a licensed professional.

As for billing reasonably, good communications before and during the time of representation should alleviate any perceived need to reduce the amount of time input for a task. Managing the client’s expectations will then equate to a perception of “reasonableness.”

Instead of spending time making excuses for underbilling, use your time to track your work in the moment. Your clients and your business will be better off for it.

Read this article as originally published at "Attorney At Work".

Categories: Practice Management
Roy greatly assisted our firm to face its future and confront current problems. We appreciated his good counsel, responsiveness and availability to “coach.”" Read the rest
– Partner, mid-sized Phoenix AZ, law firm

For More Information

  • This field is for validation purposes and should be left unchanged.