RSS Feed
Finance
The Art of Time Entries
August 2006
Time entries are the journal of what we do for our clients and are a valuable tool for communicating with clients, building and affirming client relationships, preventing misunderstandings and protecting ourselves from unfounded accusations of misconduct.
Many clients don’t carefully read the contracts and pleadings we prepare for them because they believe we are looking out for them. But they do pore over our time entries to protect themselves from us. We should take advantage of their interest in these entries as opportunities to show our skills at organization, professionalism and accomplishment. We should also use the process to earn and reinforce client loyalty.
Billing by the hour presents an inherent conflict of interest between the lawyer’s goal of maximizing income and the client’s goal of minimizing expense. The way in which lawyers record their tasks and time spent can assure clients that the lawyer is not taking undue advantage of the arrangement.
Even for those situations in which law firm compensation is not based on billing for time, the principles set forth here of using written communications to build and affirm client relationships are still applicable.
Organization
In the first stages of a client relationship on a particular matter, the time entries should indicate that we've scoped out the task. If we're preparing to file a lawsuit, for example, the time entries should indicate that we established jurisdiction, venue and the proper court, and have looked at statutes of limitation and other jurisdictional thresholds. Entries should also indicate that we explored alternatives to litigation, identified potential defendants and gathered information concerning collectability of a judgment. Time entries should indicate that we systematically approached the preparatory tasks, which will give the clients confidence that they have hired the right law firm. Most clients would be happy to pay for the preparation of a litigation budget for their approval.
Organizational skills are also demonstrated by use of legal assistants and secretaries to perform appropriate tasks.
Professionalism
Time entries should indicate that we've asked clients for their approval at important junctures. For example, an entry could be "prepare and send letter to client, asking for authorization to spend $X on Y's deposition," or "telephone conference with Bob C., in which Bob asked that we forego discovery until further notice; advise Bob that we cannot, due to court's imposition of discovery deadline." If a client calls for quick advice, it's especially important to record what advice was given or not given, with any qualifications or warnings.
These entries, making a record of our advice (with qualifications, if appropriate) and authorizations from our clients, remind the client of our advice, our reservations and their instructions to us. These entries give clients confidence in us, because we ask them for authorizations and make a record of their responses and show that we give advice with care.
Time entries which note what clients say help in two ways:
- A record is made of what the lawyer understood the client to say, which lets the client know whether the lawyer’s understanding is correct.
- The client will know that the lawyer listens to the client.
In my time spent on fee arbitration and ethical complaint investigation committees, I have rarely seen a situation in which the lawyer’s ability to defend against complaint would not have been greatly strengthened by better time entries. I would even go so far to say that a substantial number of complaints would never have been filed if the lawyer had followed the suggestions presented here.
Accomplishment
Clients are often skeptical of the amounts of time recorded in time entries. They understand that lawyers can insert almost any amount of time for any task. To work against this skepticism and build trust, we should be fair in our time entries and indicate what we've accomplished for the time entered. At the worst extreme are the time entries "file review" (or its twin "review file"), “review pleadings,” “review correspondence” and "telephone conference with X" without elaborating on the substance of the conference.
The review of routine documents and correspondence tasks are necessary and time-consuming; the time spent on them is best captured in a time entry that pairs the review with a service or accomplishment that the review triggered. Rather than “review correspondence,” a more palatable entry would be “prepare and fax response to X’s letter, replying that list of inventory will be provided to X’s client 30 days before closing date, as provided in contract.” If the review didn’t trigger a productive action, there is a plausible argument that the client received nothing for the time charged.
Ideally, each time entry would refer to a service provided or a tangible accomplishment or, such as the completion of a letter, contract or pleading, or the rendering of advice or the receipt of an authorization. If we insist to ourselves that our time entries will reflect accomplishments, we should be more productive about how we spend our time.
When the client reviews the monthly bill and recalls the receipt of the mentioned written work or the advice given by telephone, or remembers authorizing an expense, then the client understands and accepts the bill, and our credibility is strengthened.
When the client receives a bill for telephone conferences, without noting the subject or purpose, or for research not mentioning the topic and for which no memo was ever received, the client justifiably resents having to pay the bill and starts thinking about hiring a different lawyer.
Time Entry Strategies for Building Client Loyalty
Time entries are not just the cash register tape of our profession. The process of entering time, despised in some ways by all of us, can be more constructively viewed as the manner in which we show our respect for the client and ask the client to respect our profession.
The result of mutual respect is client loyalty and job satisfaction. Since time entries are read attentively by most clients, we are foolish not to use them to strengthen our practices. We are insane if we allow time entries to undermine our client relationships.
Associate attorneys rarely receive instruction in the preparation of time entries. Pressure on associates to bill many hours creates in them the pressure to pad. Reviewing, correcting and adjusting associates’ time entries is a tiresome task for the supervising attorney. The associate whose time entries show accomplishment, rather than churning, will please those who must review them.
Entry content
When I review my firm's pre-bills, I'm watching for entries that would irritate me if I were the client. Here are some of my least favorites (including, redundantly for emphasis, "review file"):
Bad entry
Problem
Better way to say it
“Review file” or “file review”
Vague, shows no accomplishment, sounds like lawyer’s can remember what was in the file since his last “review”
There’s no way to dress this up, except to include the time in an entry that includes an accomplishment
“Telephone conference with client”
Client needs to know who you talk to and the object of the conversation; some of client’s employees may not be authorized to call their employer’s attorney or to authorize particular actions.
“Telephone call from X, to discuss missing items from response to request for production; X promises to have the missing items to me by 3-10-2006” or “X authorizes spending $5,000 to take deposition of Y’s accountant in Key West”
“Telephone conference with opposing counsel.”
Client needs to know who opposing counsel is and probably should know what is being discussed. Client may not realize that opposing attorney is client’s daughter’s soccer coach or neighbor.
“Telephone call from X, who is Z’s lawyer; X says that we can delay deposition, to accommodate client’s vacation plans”
“Brief point one of MJS”
Not informative to client or to reviewing partner.
“Research and write portion of brief for our motion for summary judgment pertaining to defense of assumption of risk”
How much time?
On this topic, each attorney must follow instructions from the client or the supervising attorney.
If the attorney has a direct relationship with the client, the attorney must follow the client's instructions as given in the engagement letter or the prior course of dealings with the client.
If the billing attorney is an associate or contract attorney, working for the firm's client, the attorney needs to receive instructions. These instructions should indicate whether the attorney is to show all time for review by the appropriate partner, or whether the time entries are to fit guidelines established otherwise.
In my practice, I've developed some guidelines for the about the amount of time to be entered:
-
Don't bill for more than two hours for anything that is done at your desk (court appearances and meetings often consume larger blocks of time). It's better to break the block into multiple tasks.
-
Aggregate small entries. If you are playing phone tag, it's better to charge 0.4 hours for the phone call than 0.1 four times for dialing unsuccessfully three times and having a six-minute conversation. If I've had a few very short e-mail exchanges with clients, I lump them into a 0.2 or 0.4 hour entry, such as "exchange e-mails with X about Y; X says hold draft contract until further notice."
-
If you're going to bill a client $5,000 for the month, and the client usually gets a bill for $500 to $1,000, you'd be wise to let the client know that a big bill is on the way. You've got a much better chance of getting paid promptly, if the client knows what to expect and can assemble the cash. The client will appreciate the consideration, and you're less likely to have to wait as long for your money.
-
Take a look back over the course of the matter, to see if the client is being billed for things already done. For example, if an earlier entry indicates that certain claims or affirmative defenses have been researched, the astute client (who is usually the best kind of client to have) will wonder why he or she is being billed for the same task and think less of you for it.
You must also keep many matters moving for several clients, so you shouldn't spend all your time on just a few cases, neglecting the rest. When you put some matters aside, without the client's informed consent, you damage your relationship with your client. If spread your billing efforts over many clients, your cash flow will be more stable, and you’ll spend less time on unbillable calls from clients wanting to know the status of matters that you’ve set aside.
Don't forget all the different things you do in a day. It's often hard to have an undisturbed hour to work on any one task. All the interruptions of phone calls and e-mails will leave you frazzled, and it's easy to forget to enter the time you spent during a hectic hour or two. Take two minutes four times a day and go through your list of active matters and make entries for those things you forgot to enter (and update your to-do list while you're at it). You’ll be glad you did.
Harry Styron is a real estate attorney with a firm in Branson and Ozark, Missouri called The Styron Law Firm. He is a member of the ABA’s Real Property and Probate and State and Local Government sections.