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Attorney Time Tracking Template Best Practices

December 4, 2024 By Allison Lemasters Leave a Comment

In the legal profession, your time is one of your most important assets. Every moment spent researching case law, drafting documents, or advising clients contributes directly to your firm’s success.

Keeping track of those moments, however, is often easier said than done. Time tracking frequently gets pushed aside, relegated to quick notes at the end of a long day or overlooked entirely during a busy week. Without consistent and accurate time tracking, billable hours—and, by extension, your revenue—can slip through your fingers.

Many attorneys rely on free timesheet templates in Word, Excel, or Google Docs, but these tools often fall short when applied to the nuanced workflows of a law firm. Others use paper systems that are even more prone to error. If you’ve been asking how to track time as a lawyer, the reality is that modern legal time tracking software offers a more reliable solution.

This guide gets into every aspect of attorney time tracking templates, exploring their uses, limitations, and how they stack up against specialized time tracking software. If your current time tracking method feels outdated, you’ll find practical advice here for improving accuracy, saving time, and increasing revenue. We’ll cover the following below:

First, Why Is Time Tracking Important for Lawyers?

Tracking time helps lawyers turn their daily work into revenue while maintaining transparency, efficiency, and accountability. From managing client relationships to maintaining professional standards, effective time tracking has benefits that go beyond simple billing, such as:

Bringing Visibility to Your Work

Every phone call, email, and hour spent preparing for a case holds value. Without clear documentation, much of that effort can go unnoticed or unbilled. Time tracking helps you capture the complete picture of your work, making sure no effort is overlooked. It also provides a way to connect the hours you invested with the outcomes you delivered.

Protecting Your Reputation and Staying Transparent

Incomplete or sloppy time records can lead to client concerns—or worse, claims of overbilling. For a profession built on trust, accurate time tracking provides the transparency your clients expect. It also protects your reputation by demonstrating adherence to professional standards.

Discovering Where Time Is Wasted

Time tracking is a chance to see where inefficiencies exist. Maybe you spend too many hours on tasks that don’t require your legal expertise, or administrative work is eating into valuable client-facing time. Identifying these patterns can help you reclaim hours that could be put to better use.

Building Stronger Client Relationships

Clients often have little visibility into what their attorney is doing behind the scenes. Detailed time records can change that. When clients see how their case is progressing and where you’re spending your time to achieve their goals, it fosters confidence and strengthens the relationship. And if that client has friends or family that need an attorney, chances are they’ll likely recommend you.

Despite its clear advantages, time tracking is often treated as an afterthought. Many lawyers delay time tracking, leading to significant losses in billable hours—up to 15% by day’s end, 25% by the next day, and 50% by week’s end. If law firms want to improve their operations and deliver exceptional service, they need to rethink how they approach timekeeping. Better methods lead to more accurate billing, stronger ethics, and smarter growth strategies.

How Do Lawyers Track Their Hours?

Lawyers typically use one of three methods to log billable hours: manual tracking, templates, or specialized software. Each option offers different levels of accuracy and convenience, with templates often acting as a middle ground between old-school methods and modern tools.

1. Manual Timekeeping

Many attorneys still use notebooks or scraps of paper to jot down their hours, often filling in the details after the fact. While this low-tech method requires no fancy tools, it’s full of challenges. You can forget tasks, lack details in your descriptions, and easily leave billable time out completely. Beyond that, manual tracking can create inconsistencies across a firm, making it harder to stay organized and run smooth billing processes. For many lawyers, this approach ends up costing time—and money.

2. Template-Based Tracking

For those seeking more organization, an attorney timesheet template in Word or Excel offers a structured alternative. Templates should include pre-formatted fields for key details such as date, client name, task description, and time spent (you can find some examples in later sections of this blog). A lawyer timesheet template in Excel, for instance, might even include basic formulas to calculate totals.

However, templates come with limitations. They still require manual effort to input and manage data, leaving room for human error. Additionally, templates lack scalability and customization, often making them ill-suited for firms with multiple timekeepers or complex billing needs. Even an attorney timesheet template that’s free to use can feel cumbersome as workloads grow, highlighting the need for a more efficient system.

3. Time Tracking Software

For attorneys seeking both precision and convenience, legal time tracking software like Bill4Time bridges the gap. Unlike templates, legal software automates critical functions such as real-time tracking, task categorization, and invoicing. It also eliminates common pain points, like forgotten entries or inconsistent formats, by providing a unified platform tailored to legal workflows.

Features such as built-in UTBMS codes and detailed reporting capabilities make software the most comprehensive solution. While templates may suffice for solo practitioners or those starting out, software becomes essential as firms grow and face more complex demands.

Templates often appeal to attorneys who want an inexpensive option, but they tend to reveal their shortcomings quickly. When evaluating time tracking methods, it’s important to assess not just the upfront cost but also the long-term impact on accuracy, productivity, and client trust. Attorney time tracking templates offer a stepping stone, but many firms find that modern platforms like Bill4Time ultimately provide the consistency and efficiency they need.

For those considering free templates, let’s explore how these options compare and how they might work out for your firm.

What Is a Billable Hours Spreadsheet for Lawyers?

A billable hours spreadsheet or template provides a structured way for lawyers to log their work and manage billable time. Typically designed in Excel, these templates allow attorneys to track tasks and hours with predefined categories. They serve as an accessible starting point for organizing timekeeping, especially for solo practitioners or smaller firms. A standard template might include:

Date: Capturing when the work occurred.
Client Name/Matter: Clearly associating time entries with the relevant case or client.
Task Description: Summarizing the activity performed, such as drafting, court appearances, research, client meetings, etc.
Time Spent: Logging hours in standard increments like six or fifteen minutes to align with industry norms.
Rate/Total: Fields to calculate fees based on your hourly rate.

While these templates aim to bring order to time tracking, they often fall short of meeting the complex needs of a law firm. Unlike more advanced time tracking systems, a billable hours spreadsheet doesn’t account for interruptions, non-billable tasks, or UTBMS codes. These limitations make templates a stopgap solution, suitable for basic time tracking but insufficient for the detailed invoicing and compliance standards most firms require.

For attorneys exploring time tracking solutions, templates can be helpful for basic organization, but their static format and lack of automation often create inefficiencies. They highlight the need for a more adaptable and scalable system, especially as firms grow or handle increasingly complex billing requirements. An attorney time tracking template should ideally integrate into a broader system that streamlines processes, minimizes errors, and supports compliance.

If you’re looking for an attorney timesheet template, you may be tempted to download one of the many free options online. Let’s evaluate the strengths and weaknesses of these templates before comparing them to more modern solutions.

Does Word Have a Timesheet Template for Law Firms?

Word doesn’t seem to offer a time tracking template specifically for law firms, although you can find a few subpar examples online. For example, consider this one made in Word:

free attorney billing timesheet templates PDF

The immediate problems with this template may not be evident right away, but ask yourself this:

How do you know what the attorney’s hourly rate is?
How should timekeepers with different rates working on the same case handle their calculations?
How can you tell what the billing time increment is?
How should UTBMS codes be applied to specific tasks or line items?
How can an attorney accurately log time when a task is interrupted multiple times?
How do you differentiate between services, expenses, travel, etc.?
How do you calculate legal billable hours?

This template doesn’t address many of the challenges attorneys face, yet it’s been downloaded tens of thousands of times. Users have even pointed out that it doesn’t include basic Excel calculations, leaving them to manually total their billable hours.

We understand the frustration, Linda. With everything attorneys have on their plates, manually calculating hours shouldn’t be part of the process. Unfortunately, even free Excel timesheet templates often fall short. Let’s explore why.

How Do I Create a Time Tracking Sheet in Excel?

If you’re set on building your own tracking system, “How do I create a simple timesheet in Excel?” is a common question. Consider this example that the Washington State Bar Association provides as a solution to people asking, “How do I create a monthly timesheet in Excel?”

This isn’t a bad start, but again, issues will likely start coming up as you use it, like:

It requires manual input, leaving room for errors and inconsistencies.
It doesn’t integrate with any billing systems, so invoices have to be created separately, and there’s no easy way to pull all the time for one client or matter.
Users must manually transfer recorded hours to an invoicing platform, increasing the risk of lost data or missed entries.
There’s no way to automatically capture time in real-time, making it easy to forget tasks.
Interruptions aren’t accounted for, so fragmented work is difficult to track.
You can’t easily pull reports or analytics to understand productivity or profitability.

For those with more complex needs, Excel’s versatility can be a double-edged sword. While you can tailor templates to fit your firm’s workflows, the process often requires advanced knowledge of formulas and formatting. And even then, creating an invoice from the template becomes a headache on its own.

So, what about Google Docs? Is there a better solution there? Let’s take a look.

Is There a Billable Hours Template in Google Docs?

Google Docs is another popular tool for free templates. A billable hours template in Google Docs mimics the functionality of Word with slightly easier collaboration features. While convenient, it suffers from the same limitations:

No built-in calculations or tracking
Lack of fields for legal-specific data like UTBMS codes
Potential inconsistencies across user-generated templates

These shortcomings often prompt attorneys to seek more robust solutions tailored to their profession.

How Do Lawyers Record Billable Hours Using Time Tracking Software?

Tracking time with templates or spreadsheets may work for small tasks, but it often leads to missed hours and unnecessary frustration. After exploring the limitations of manual systems, Word, Excel, and Google Docs templates, it becomes clear why many attorneys turn to legal time tracking software, like Bill4Time. Here’s how it works:

1. Log Hours as You Work

Manual methods often lead to legal professionals entering their time at the end of the day—or even later—which will result in forgotten details. Bill4Time eliminates this issue by allowing you to track time in real time. For example, if you’re interrupted by a client call while drafting a motion, you can pause one timer, start another, and pick up where you left off without missing a moment.

2. Make Billing Easier

Manual billing is tedious and leaves too much room for mistakes. With Bill4Time, recorded hours flow directly into automatically generated invoices, complete with task-specific rates for partners, associates, or paralegals. You can skip the hours of recalculating totals and instead generate detailed invoices with just a few clicks.

3. Use Customizable Categories

Unlike most templates you’ll find on the internet, Bill4Time is built with legal workflows in mind. Attorneys can categorize their time entries by specific tasks, such as drafting, client meetings, or court appearances, and even use UTBMS codes for clients who require detailed, task-based billing.

Additionally, these detailed categorizations make pulling reports significantly easier and more meaningful. Firms can analyze time spent by task type, client, or matter to identify inefficiencies, optimize workflows, and evaluate profitability.

4. Track Billable and Non-billable Hours

Attorneys don’t spend all their time on billable tasks—administrative work, team meetings, and training also take up hours. Bill4Time makes it simple to log both billable and non-billable time. Insight like this can help you identify inefficiencies, like excessive time spent on admin tasks, and make smarter decisions about delegating or reorganizing workloads.

5. Access from Anywhere

While templates can be stored on a cloud drive, their usability on mobile devices leaves much to be desired. Adjusting columns, scrolling through rows, and entering data on a small screen can be cumbersome and error-prone—especially for attorneys working in fast-paced environments.

Bill4Time, on the other hand, is cloud-based and optimized for desktop and mobile use, offering a seamless experience across devices. After a client meeting at the courthouse, you can easily log your time using the Bill4Time mobile app without struggling with clunky formatting or awkward data entry.

6. Pull Automatic Audit Trails for Transparency

Spreadsheets and templates won’t inherently offer a secure, tamper-proof way to track changes across different users or devices. With Bill4Time, every action—whether it’s creating, editing, or adjusting a time entry—is automatically logged. Having a built-in audit trail helps your firm stay transparent and resolve any client questions by knowing exactly who made changes and when. Plus, all the data is stored in one centralized system, making it far more reliable and accessible than scattered spreadsheets.

7. Track Time and Expenses in One Place

Many templates focus only on time and require attorneys to manage expenses separately. Bill4Time combines both, allowing you to log expenses like travel, lodging, or filing fees alongside your hours.

What Do Lawyers Use to Keep Track of Billable Hours?

For many attorneys, time tracking starts with templates—simple, easy-to-access tools that promise to bring structure to their day. But as we’ve explored, templates often reveal their limitations as workloads grow or billing needs become more complex. They’re a stepping stone, not the end solution.

Today’s legal professionals increasingly turn to software like Bill4Time, which not only offers robust time tracking but is also a full legal practice management solution (LPMS). Having your time tracking integrated directly into your LPMS streamlines every aspect of your firm’s operations, from case management and client communications to billing and reporting. With all your tools connected in one platform, there’s no need to juggle separate systems or risk errors from manual data transfers.

While templates can work as a temporary fix, they don’t grow with your firm’s needs or provide the holistic support of a complete practice management solution. Bill4Time does, combining time tracking with the tools you need to manage your firm effectively and profitably. Whether you’re working from the courthouse, the office, or home, Bill4Time makes tracking your hours—and managing your practice—effortless.

If you’re ready to experience a more efficient way to manage your time and billing, try a free trial of Bill4Time or click the button below to schedule your personalized walkthrough today.

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How to Define Your Firm’s Legal Billing Guidelines

November 20, 2024 By Allison Lemasters Leave a Comment

Just like any business, establishing clear and ethically compliant billing practices is crucial for law firms. Your billing practices directly affect not only your bottom line but also your firm’s commitment to transparency and the client experience.

But creating your firm’s billing guidelines — and enforcing them — is a challenge of its own. Modern legal e-billing software simplifies the process by organizing your policies in one place, promoting consistency, and making fee collection more straightforward. And with the right approach (which we’ll go over below), your firm can establish billing practices that are easy to follow and beneficial for both your team and your clients.

The Role of Legal Billing Guidelines for Lawyers

Whether you’re drafting these policies for the first time or improving what you already have, thoughtful billing practices set the tone for how clients see your firm. Effective billing policies can:

Help your team handle billing consistently and efficiently.
Reduce errors that could lead to client dissatisfaction or complaints.
Define roles so everyone knows who is responsible for each part of the billing process.
Promote timely payments by minimizing client questions about charges.
Directly affect your firm’s bottom line.
Reduce the chances of malpractice claims.

When your client gets their bill, they see beyond the numbers and start forming opinions about your firm’s organization and honesty. Confusing charges or unexpected fees can leave them doubting your transparency or, worse, unwilling to pay.

Additionally, there are numerous ethical standards at play when it comes to legal billing. Attorneys must follow the American Bar Association’s (ABA) Model Rules of Professional Conduct, which highlight issues regarding transparency and fairness in fee arrangements. For instance, double billing—a practice where time is charged to multiple clients for overlapping tasks—is prohibited in many jurisdictions and can lead to serious repercussions, including disciplinary action or fee disputes.

Overall, when you view your billing practices as part of your broader client service strategy, you elevate your firm’s reputation while ensuring compliance with ethical standards.

What Should Be In the Billing Guidelines for My Law Firm?

Your legal billing guidelines help ensure that the client and everyone in your firm are on the same page about all things related to payment. Here is a sample of legal billing guidelines you can incorporate:

1. Assign Billing Responsibilities

Define roles clearly across your team. Who enters billable time? Who reviews invoices for accuracy? What are your outside counsel billing guidelines? Establishing responsibility for each step prevents duplication of work and minimizes mistakes. For instance, junior associates might handle initial time entries, while senior attorneys review and approve invoices before they’re finalized.

2. Set Standards for Legal Billing Descriptions

Include expectations for detailed descriptions that reflect the value of the work performed. Encourage your team to avoid vague entries like “client correspondence” and instead specify tasks such as “drafted response to client inquiry regarding settlement terms.” You can even include some legal billing entry examples for more common tasks that your team can copy and paste as needed.

3. Create Policies for Billing Increments

Define what billing time increments your firm should use, whether in six-minute, fifteen-minute, or other increments. Include rules for how to calculate attorney billable hours and rounding practices to ensure consistency across all timekeepers. For example, specify whether a four-minute task can be rounded up to six minutes (if using six-minute increments) and how that applies to short activities like emails or quick consultations. You can even include an attorney billing cheat sheet for quick reference on breaking down billing increments (check out this blog for some charts you can save and print for this purpose).

4. Streamline Expense Documentation

Provide clear instructions on how to record disbursements, like filing fees, travel costs, expert witness payments, etc. Standardize the documentation process so everyone uses the same codes, categories, or software tools. Encourage thorough documentation, as this helps ensure accurate reporting and smooth client invoicing.

5. Create a Review Process

Outline how and when your firm reviews invoices before they’re sent. Assign responsibility for checking time entries, verifying compliance with client engagement terms, and double checking disbursements are categorized correctly. A multi-layered review process, with at least one senior team member involved, minimizes the risk of errors or ethical oversights.

6. Incorporate Ethical Safeguards

Your guidelines should reflect the ethical obligations attorneys face in billing. Prohibit billing at attorney rates for tasks like scheduling or administrative duties. Include measures to avoid accidental double billing or overcharging for standard tasks. Regular internal audits can help catch inconsistencies and reinforce compliance.

7. Set Billing Timelines

Define deadlines for every step of the billing cycle. Require attorneys to submit time entries daily, or at least weekly, to prevent last-minute bottlenecks. Establish a consistent schedule for generating and approving invoices. Predictability benefits your internal workflow and client expectations alike.

8. Include Legal E-Billing Software Protocols

Your internal billing guidelines should outline how your team uses legal e-billing software to support your billing practices. Specify which software your firm uses—for example, platforms like Bill4Time—and provide instructions on its key features, like time tracking, invoicing, and trust accounting. Include specific instructions on how to input data, such as tagging billable hours with clear descriptions or categorizing disbursements correctly. Bill4Time offers numerous training resources you can link to directly in your billing guidelines as well.

How to Communicate Your Legal Billing Practices to Clients

Billing guidelines can make it much easier to discuss billing issues with clients, as your team will have something to fall back on as questions arise. You can even include some pointers on communicating billing practices to clients, such as:

Set expectations early. Discuss your billing process during the initial consultation or engagement agreement review. Cover topics like hourly rates, billing increments, and any costs the client may be responsible for, such as the filing fee or paying any third parties involved.
Provide a written summary. Share a straightforward summary of your billing policies in the engagement letter or welcome materials. Use simple language to explain payment timelines, accepted payment methods, and where clients can access invoices.
Make space for client questions. Let clients know whom to contact if they have questions about their invoices. If your team has the bandwidth, assign a specific team member to handle all inquiries.
Address changes immediately. Notify clients as soon as there’s a change in the scope of work or cost expectations. Provide updates in writing to keep the communication clear and well-documented.
Use technology for transparency. Bill4Time, for example, provides a client-facing portal where they can access invoices and track payment statuses. If you plan to use such features, include instructions on how to access them.
Send regular payment reminders. Automate invoice reminders using your billing software to notify clients about upcoming due dates or overdue payments. Bill4Time’s automated payment reminders let you set customized schedules so clients receive timely notices while your team focuses on higher-priority tasks.
Incorporate client feedback. Act on feedback from clients regarding your billing process. Adjusting how you communicate based on their input helps build stronger relationships and ensures your practices remain client-friendly.

How Legal Software Can Support Your Firm’s Billing Guidelines

Billing software transforms your firm’s guidelines from policies into practical workflows that your team can follow every day. These tools help your firm handle key tasks like tracking billable hours, creating accurate invoices, and collecting payments, all while staying consistent with your established practices.

For example, platforms like Bill4Time make it easy to automate routine processes, such as setting payment deadlines or sending reminders. Bill4Time’s client-facing features, like branded invoices and payment portals, also promote transparency and help clients stay on top of their obligations. By reducing manual work and centralizing your billing practices, you create a system that benefits both your team and your clients.

Bringing your billing guidelines to life is simpler when you have the right tools in place. Try a free demo of Bill4Time today and see how it can optimize your billing process, improve client satisfaction, and help your team work more efficiently.

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A Guide to Law Firm Payment Processing That Increases Revenue

November 7, 2024 By Dan Bowman Leave a Comment

Today’s clients, used to instant, flexible payment options everywhere else, bring those same expectations to their legal interactions. This trend has pushed the legal industry to explore online payment systems for law firms that improve client satisfaction, reduce disputes, and support a healthy cash flow.

Below, we’ll highlight the key factors to consider when selecting a payment processor that meets your firm’s needs and keeps clients satisfied.

What Should I Look for in an Online Payment Processing Provider?

When choosing an online payment processing provider, you want something that’s secure, easy to use, and doesn’t cost you a ton in fees. As you consider a payment processor, ask yourself the following:

1. What Payment Options Does It Support?

A strong payment processor should accommodate a variety of methods, such as credit card, eCheck, and ACH, to match client preferences and legal billing requirements. Additionally, look for a system that offers flexibility to adapt to different client payment needs, such as installment plans or recurring billing, without creating administrative complexity.

2. Is It Easy to Use and Integrate?

Ideally, your payment processor will be native to your legal practice management software, so you can keep all your billing and invoicing in the same place you manage your cases. Bill4Time, for example, has made accepting multiple payment methods easy with a built-in payments processor, Bill4Time Payments.

With Bill4Time Payments, you can create custom payment links through Link2Pay. The Link2Pay feature lets you add secure payment links to invoices, your website, or other correspondence to allow clients to pay by credit card or eCheck payment in just a few clicks on any accessible device. To make collecting payments even easier, you can also enable Bill4Time’s attorney-client portal so clients can easily access and pay their invoices in a secure place.

3. How Secure and Compliant Is It?

A quality payment processor should be able to manage nuanced compliance needs specific to trust accounting, such as maintaining detailed audit trails that automatically document every transaction and ensure accurate reconciliation. Compliance should also cover how the processor handles client data storage and retention policies. You want it to align with both your firm’s ethical obligations and any applicable data protection laws, like the General Data Protection Regulation (GDPR) or state-specific privacy regulations that may affect multi-jurisdictional practices.

4. How Much Are Transaction Fees?

It’s important to know exactly what you’re paying in transaction fees and how they could affect your firm’s bottom line over time. High or unclear fees can eat into profits quickly, especially when they come with hidden charges or complicated pricing structures. When comparing payment processors, make sure you get a complete breakdown of all potential costs, including membership or compliance fees.

Bill4Time Payments, for instance, keeps things simple with a flat 2.9% fee for all credit card transactions, providing more predictability. This also includes a cap on eCheck fees at 1%, making it a cost-effective choice for larger payments compared to the fluctuating rates other providers might charge.

What Are the Steps in Payment Processing?

While payment processes may vary slightly between providers, here’s a detailed breakdown of what to expect:

Step 1: Complete Initial Setup and Activation

Setting up your payment processing system should be straightforward and quick. With platforms like Bill4Time Payments, activation is user-friendly, involving no setup fees or additional monthly commitments beyond your subscription. The goal is to have your system ready without needing extensive IT support or long wait times.

Step 2: Integrate with Practice Management Tools

There are some standalone payment processors you can use, but the best practice is to find one that is built into a legal practice management platform, like how Bill4Time Payments is part of Bill4Time. With everything in one place, your firm can handle invoicing, payments, and case management without the back-and-forth between platforms (or the additional cost of a second platform).

Step 3: Customize Payment Features

Tailoring the system to meet your firm’s needs is essential. You’ll want to set up custom invoice templates and embed secure payment links directly into client communications. Customization should also include configuring user access permissions so that only authorized personnel can handle financial data, adding a layer of internal security.

Step 4: Start Distributing Invoices and Collecting Payments

With your setup complete, you can start sending invoices and payment links to your clients. Make these links easy for clients to use so they can pay by their preferred method, whether that’s a credit card or eCheck. Using features like Bill4Time’s client portal allows clients to see their invoices and make payments more conveniently, helping promote timely payments and transparency.

Step 5: Automate Follow-Ups

Automated reminders can help clients remember upcoming or past-due payments. Set these to go out via email or through a client portal to keep cash flow steady without adding more work for your staff.

Step 6: Get Paid

Once a client submits a payment, the process should transition into fund transfer without delays. With Bill4Time Payments, linking your firm’s operating and trust accounts is straightforward, eliminating the need for micro-deposits or extended bank verification times. Once payment is made, both you and your client receive instant notifications confirming the transaction. As far as processing time, funds are typically posted to your firm’s bank account within 2-3 business days for credit card transactions and up to 3 business days for eChecks.

See How Smooth Online Payment Processing Can Be With Bill4Time

Offering online payments means making an investment in the success of your firm and providing top-tier experiences for your clients. Bill4Time Payments helps bridge the gaps in your billing process, making it easier for your firm to meet client expectations and maintain steady cash flow.

If you want to know how smoother payment processing can benefit your practice, check out a free demo of Bill4Time and see what a difference it can make by clicking the button below.

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7 Tactful Strategies for Justifying an Attorney Rate Increase to Clients

September 12, 2024 By Allison Lemasters Leave a Comment

Raising your rates can feel like walking a tightrope. On one hand, you want to be fairly compensated for your work. On the other, you don’t want clients to balk at the idea of paying more.

So, how do you handle this? It starts with communication and a strategy that shows your value clearly. Let’s look at a some averages on hourly rates to see if a rate increase is appropriate along with a few ways you can approach this conversation.

What Do Top Lawyers Bill per Hour?

When it comes to billing rates, Washington, D.C., leads the pack. According to a recent law firm billing rates survey by the National Association of Legal Fee Analysis, D.C. is home to the highest litigation billing rates in the country. A quarter of litigators in the nation’s capital report billing between $951 and $1,300 per hour, with a small but notable number charging even more. The survey, which included responses from over 2,000 attorneys in D.C., showed that 97 attorneys charge more than $1,300 per hour.

In comparison, what is the hourly rate for a lawyer in California, another big legal market? San Francisco, which ranked second, had only 13% of attorneys in that top tier of billing rates. The difference between the two cities highlights D.C.’s dominance in litigation, driven by the high concentration of major law firms and increasing associate salaries. Billing rates in D.C. are expected to continue rising, with firms in both the U.S. and U.K. anticipating increases in the next year.

While these elite rates are impressive, attorneys outside major markets should assess their own circumstances carefully. When asking, “What is a reasonable fee for me to charge?” you’ll need to consider regional factors, such as client demand, practice area, competition, and the average rate for your area.

What Is the Average Lawyer Cost per Hour?

According to that same survey by the National Association of Legal Fee Analysis, the national average for attorney billing rates in 2023 ranged from $300 to $500 per hour for many common legal services, such as general civil litigation and family law. However, in more specialized fields like intellectual property, corporate law, or complex litigation, rates can be significantly higher, often exceeding $800 per hour. Attorneys in smaller markets or less populated areas, like the Midwest or Southeast, tend to charge lower rates, usually between $200 and $400 per hour.

Another method you can use to determine an appropriate hourly rate is by using legal practice management software like Bill4Time. Bill4Time’s detailed reporting features can give you insight into your billing practices, profitability, and time spent on cases. By analyzing time-tracking reports and revenue data, you can assess if your current rates cover costs and reflect the value they’re providing. For instance, you can review time spent on cases versus amounts billed, factoring in write-downs or discounts, to determine if your rates need to be adjusted.

Once you’ve determined an hourly rate, and it happens to be higher than what you’re charging, it’s now time to consider how you will inform your clients of the rate increase.

How Do I Inform Clients of an Attorney Rate Increase?

Overall, clients are more likely to accept an hourly rate increase if they feel the increase is justified and communicated with care. Here are some effective strategies for approaching the conversation:

Advance Notice: Give clients ample time to adjust. Inform them well before the increase takes effect, ideally at least 30 to 60 days in advance, so they have time to process the change, ask questions, and budget accordingly.
Explain the Reason: Be transparent about why rates are going up. Whether it’s due to rising operational costs, increased demand, or the growing complexity of legal matters, clients appreciate understanding the reasoning behind the decision.
Highlight the Value: Emphasize the benefits and value the client will continue to receive. If you’ve achieved significant results for the client or your services have evolved, this is a good opportunity to remind them of the quality and expertise they’re paying for.
Personalize the Message: Avoid sending a generic notice. Personalized emails or letters, or even a direct conversation, show that you value the relationship. Mention specific cases or outcomes you’ve worked on together to make the client feel recognized.
Offer Options: If appropriate, consider offering phased increases or alternative payment plans, especially for long-term or high-value clients. This can soften the impact of the rate change.
Communicate with Confidence: Avoid apologizing for the increase. Instead, present it confidently, focusing on the value and service you provide, and assure clients that they are still receiving top-notch legal representation.
Address Concerns Directly: Be prepared to handle any concerns or pushback. Offer to discuss the increase and explain why it’s necessary, and reinforce the positive aspects of continuing the relationship.

These tactics help to maintain trust while communicating important changes clearly and professionally.

Attorney Rate Increase Letter Sample

Below is a personalized sample letter that ensures your clients understand the reasoning behind the change while emphasizing the value they continue to receive. Take this template as a starting point and adjust it according to your firm’s needs:

Dear [Client’s Name],

I hope you’re doing well. It’s been a privilege working with you on [specific matter or case type], and I truly value the trust you’ve placed in us to handle your legal needs.

As things have progressed, and as the demands of [specific case type or area of law] continue to grow, we’ve taken steps to stay ahead of the curve. To keep providing the level of service and attention to detail you’ve come to expect, we’re updating our rates. Starting on [effective date, at least 30-60 days in advance], our hourly rate will increase from [current rate] to [new rate]. This update allows us to continue dedicating the resources necessary to meet the evolving complexities of your legal matters.

I’ve always appreciated how smoothly we’ve worked together, especially on [briefly mention a positive outcome or collaboration]. Those results are a direct reflection of our shared commitment to achieving the best possible outcomes, and we’re excited to continue that momentum.

If you have any questions about the new rates or would like to explore other options such as [payment plans, phased increases, etc.], please don’t hesitate to reach out. I truly value our partnership, and I look forward to continuing to provide the support you need.

Best regards,

[Your Name, Firm, and Contact Information]

Make Rate Adjustments Easier with Bill4Time

Figuring out when to raise your rates can feel uncertain, but it helps to have clear data. Bill4Time’s reporting features allow you to review your billable hours, case details, and revenue trends to see if your current rates reflect the work you’re putting in. It’s a practical way to decide if an increase makes sense based on what’s actually happening in your practice.

Wondering if Bill4Time is the right fit for your practice? Sign up for a demo or free trial and see how it simplifies billing, rate decisions, and so much more.

Hard Costs vs. Soft Costs: Everything Law Firms Should Know

July 19, 2024 By Allison Lemasters Leave a Comment

As an attorney, you encounter a variety of expenses while managing cases and providing services to clients. These expenses, charged on behalf of your clients, must be accurately accounted for in your firm’s books.

You’ll deal with two types of expenses: hard costs and soft costs. Knowing the distinction between them and how to handle each in your accounting is crucial. Let’s break it down.

What Are Hard Costs and Soft Costs?

All of your law firm’s expenses are broken down into two categories: hard costs and soft costs.

Hard costs, also known as direct costs, are those expenses your firm incurs on behalf of a client that require direct payment to a vendor. These costs are tangible and easily traceable to a specific client or case. Typically, you pay these upfront and later seek reimbursement from your clients. They are classified as law practice expenses and deducted from your firm’s income.

Soft costs, or indirect costs, differ in that they do not require direct payment to a vendor and often cover more general, operational expenses. These costs can be more diffuse and are often part of the daily functioning of your firm. Some firms charge these costs to clients, while others absorb them as the necessary costs of doing business.

Examples of Hard and Soft Costs

If your firm pays a court filing fee directly for a client case, that’s a hard cost. Other hard costs may include:

Court filing fees
Court reporter fees
Mediation fees
Hearing transcript fees
Expert witness fees
Travel expenses
Medical records fees
Subpoena fees

If your firm charges for the photocopies you make using your own office equipment, you incurred costs but didn’t have to pay a vendor. This scenario would be considered a soft cost. Other soft costs may include:

Photocopying
Telephone services
Internet services
Printing costs
Legal research material
Postage and shipping
Office supplies
Software licenses

To further clarify how to categorize each, let’s examine a practical scenario. Think about the last time you paid a filing fee to the court for a client’s case. This expense is a hard cost because it involves a direct payment to a specific vendor (the court). You would record this payment as an accounts receivable, billing the client for reimbursement.

In contrast, consider the scenario where your firm uses its office photocopier to make copies of documents for a client’s case. You incur costs (such as toner and paper) but do not make a direct payment to an outside vendor for each copy. This is a soft cost. While you might bill the client a nominal fee per copy, the cost is generally part of your firm’s overhead.

Person using laptop with Bill4Time legal time and expense reporting software feature screens

Resources to Track Hard Costs and Soft Costs at Law Firms

Tracking your law firm’s expenses accurately is crucial for maintaining financial health and ensuring client transparency. The right legal time and expense software can make this task seamless, allowing you to keep detailed records and avoid any financial discrepancies. Let’s look at a few software features that streamline this process for legal professionals:

1. Time and Expense Management

Time and expense tracking is the foundation of accurate accounting in any law firm. Using software like Bill4Time, you can capture your time in real-time on any device, which means no more relying on outdated methods like spreadsheets or notepads. This level of precision ensures that every minute you spend working on a client’s case is accounted for, preventing lost billable hours and making sure you’re compensated for all your efforts.

Now, here’s the trick: with Bill4Time, you can meticulously track both hard and soft costs. These might seem minor, but they add up. With detailed tracking, you can document and account for even those small, often overlooked expenses. This way, capturing transactions incurred on behalf of a client for reimbursement is incredibly easy.

2. Custom Reporting

To truly understand your firm’s financial health, you need more than just basic accounting data. Bill4Time’s custom reporting feature provides a comprehensive view of your firm’s financial activities. Whether you need to review your overall accounting activity or look into specifics like payment history, expenses, or collections by client or matter, these reports help you identify gaps and issues.

With custom reporting, you can also see where your firm is spending the most money or which clients have outstanding payments. This insight allows you to make informed financial decisions and improve your firm’s profitability.

3. Invoice Templates

Clear communication with clients about charges is essential to avoid confusion and maintain trust. Standardizing your legal invoicing process with Bill4Time helps you generate transparent invoices quickly and effectively. This feature speeds up the invoicing process and ensures consistency across your firm.

Having a well-defined invoice creation process as part of your firm’s legal billing policy is crucial. With Bill4Time, you can create custom invoice templates tailored to your firm’s needs. These templates reduce the time it takes to generate invoices and ensure that each invoice clearly communicates hard and soft costs. Providing clients with detailed, easy-to-understand invoices reduces the likelihood of disputes and improves client satisfaction.

Importance of Tracking Hard Costs and Soft Costs

Understanding your firm’s financial health hinges on keeping track of both hard and soft costs. Here’s why it’s so important and how you can do it effectively.

Accurate Finances

Hard and soft costs should be tracked differently for accounting purposes. By categorizing these expenses correctly, you ensure that your financial records are precise. This accuracy helps in billing clients for the appropriate reimbursements and understanding the true cost of running your practice.

Billing Accuracy and Happy Clients

When you bill clients for costs your firm has incurred, it’s essential they understand what these costs are and why they were charged. Clear, detailed invoices that differentiate between hard and soft costs help clients see exactly what they’re paying for, which boosts client retention and minimizes conflicts over charges.

Compliance

Compliance with legal billing standards is non-negotiable. Legal billing must align with the American Bar Association, state bar guidelines, and Interest on Lawyers’ Trust Accounts (IOLTA) regulations. Accurate billing and expense tracking are mandatory to meet these standards. By keeping meticulous records of your hard and soft costs, you ensure your firm stays compliant with all necessary regulations, avoiding potential legal issues.

Final Thoughts on Hard Costs vs. Soft Costs

Effective expense tracking is key to running a profitable law firm. Managing hard and soft costs efficiently not only improves your firm’s financial health but also builds trust with your clients. Software features like Bill4Time’s law firm invoicing and expense tracking make this process seamless. They help you categorize expenses accurately, bill clients transparently, and stay compliant with legal standards.

Using Bill4Time, your firm can handle the complexities of hard and soft costs with ease, ensuring that your finances are always in order and your client relationships remain strong. Someone from our Bill4Time team would be happy to show you how this works — schedule a demo to get started!

Best Practices For Communicating Legal Fees and Expenses to Clients

July 16, 2024 By Allison Lemasters Leave a Comment

Clients want transparency about fees and expenses. It’s essential for a strong client relationship, but how do you provide this information effectively?

Clear communication about fees isn’t as straightforward as it might seem. The challenge lies in the details: How much should you disclose? How frequently? In what format?

Handled well, transparent communication can foster trust and provide clients with the confidence they need in your firm.

Establishing Client Trust

Over the past two decades, the public’s trust in lawyers has fluctuated, according to Gallup’s annual poll on honesty and ethics in various professions. In 2023, only 16% of Americans rated attorneys as having very high or high standards of honesty and ethics, marking a significant decline from previous years. This is down from 21% in 2022 and a high of 22% in 2019.

honesty and ethical standards of lawyers — Source: Gallup

This perception is far from ideal. In an industry where trust is vital, being viewed as average can be a significant barrier. Clients are placing their legal matters — and often their personal lives — in your hands. They need to believe not just in your expertise but in your integrity.

Open and honest communication is key. Clients want clear answers to specific questions: Are you an expert? Do you care about your clients? Are you a good fit for their needs? Among these, one question stands out: Are your fees reasonable?

Clients seek clarity on fees and expenses, expecting detailed and timely information. This transparency reassures them that they’re getting value for their money.

How Do You Explain Fees to Clients?

Your clients have a hidden, unspoken, non-negotiable expectation: They want to feel they’re getting more value than what they’re paying for. It’s an implicit test. When they ask about fees, they’re really asking, “Are you giving me more than I’m paying you?” The answer must always be yes.

To convey this, follow these best practices for communicating legal fees:

1. Align Financial Interests

Clients want to see that your financial interests align with theirs. Be upfront about whether they are willing to pay for certain fees or if they find them unreasonable. Avoid surprises and ambiguity by clearly explaining what each fee covers and why it’s necessary. Transparency here builds trust and shows you respect their investment in your services.

2. Clarify Fee Structures

Engage your clients in a detailed discussion about the different fee structures available, from flat fees to hourly billing. By discussing these options and their implications, you help clients choose the arrangement that best suits their needs and budget. Making their expectations explicit and realistic at the outset avoids misunderstandings and sets a clear financial foundation.

3. Demonstrate Value

Show clients a detailed breakdown of fees and services to demonstrate the value you’re providing. Outline your fees and expenses clearly and completely. Highlighting the specific benefits and outcomes they can expect from your services will reassure them that their money is well spent.

More specifically, here’s a few ways you can show clients your worth:

During your first meeting, provide a comprehensive overview of the anticipated services and associated costs. Outline the expected fees for each step and discuss how these services protect the client from legal pitfalls.
Throughout the case, keep clients informed with regular updates. Include a summary of hours spent and tasks completed, so clients see the ongoing effort and expertise involved.
On invoices, provide detailed breakdowns of all services and expenses. Include a description of each service and its benefits. For instance, instead of “Appeared at preliminary hearing,” you might note, “Represented client at preliminary hearing to argue for dismissal of unfounded claims.”
At the conclusion of a case, provide a summary report that outlines all the services performed, the outcomes achieved, and how these align with the client’s goals.

By integrating these methods into your practice, you clearly demonstrate the value you provide, ensuring clients understand and appreciate the expertise and effort behind each fee.

4. Track Everything

Meticulous tracking of time and expenses is fundamental to transparent and accurate billing. Every timekeeping employee should rigorously record their time, regardless of the fee arrangement. To do this at your law firm, implement these practices:

Detailed time tracking: Implement a robust time-tracking system where your team records every task with precision. Each entry should specify the task, time spent, and its relevance to the client’s case.
Expense tracking: Record all expenses meticulously, from filing fees and court costs to travel and expert witness fees. Use software that allows you to categorize and itemize each expense. Categorizing these helps clients see exactly where their money is going.
Document write-offs/write-downs: Document write-offs and write-downs clearly. If you decide not to charge for certain services or reduce a fee, record the reason and communicate this to the client. Explaining such adjustments builds trust and shows clients you are fair and considerate.
Time tracking technology: It’s really difficult to track all of these moving parts without legal time tracking software. Bill4Time, for example, provides a comprehensive solution for managing time and expenses. It allows your team to log hours and expenses in real time, categorize entries, and generate detailed reports. See how it works by scheduling a free demo.

5. Set Policies and Procedures

Create a comprehensive list of fee and expense types and implement a “cost capture” policy. Clarify billing for soft costs (e.g., copies, scans, postage) and hard costs (e.g., travel, lodging, meals). Define how your firm handles unexpected variances, discounts, and write-downs. Clear policies ensure consistent and fair billing practices.

Bill4Time can significantly aid in implementing these policies with its comprehensive feature set. For instance, Bill4Time’s expense tracking feature allows you to categorize expenses as soft or hard costs directly within the system. You can also pre-set categories for common expenses, such as travel or photocopying, and assign them to specific client matters automatically.

6. Add Details to Agreements

Your retainer/fee agreement should explicitly outline all fees, expenses, and firm policies. Include specific details about hourly rates, fixed fees, retainer requirements, and any potential additional costs.

Additionally, clearly define what services are included and any that may incur additional charges. This protects both you and the client by setting clear expectations. For instance, specify that court filing fees, travel expenses for depositions, and expert witness fees are additional costs that the client must cover.

A well-drafted agreement serves as a reference point in case of any disagreements. It ensures that both parties understand the financial obligations and can refer back to the document if any disputes arise.

7. Preemptively Deliver News About Unexpected Costs

If there are significant deviations from the budget or unexpected expenses, communicate this immediately. Pick up the phone or send an email to explain the situation before sending the invoice. Provide a detailed explanation of the unexpected costs, including why they arose and their impact on the overall budget.

Add this explanation to the invoice as well, ensuring that all involved parties are aware of the changes. For example, if an unforeseen court motion requires additional hours, detail this on the invoice with a note explaining the necessity.

8. Be Descriptive on Invoices

Ensure invoices are detailed, including who to pay, how much, due dates, and a breakdown of hours and fees. List each service provided, the time spent, and the corresponding charge. Highlight what you did versus what you provided. For instance, instead of just listing “Research,” specify “Researched case law precedents for client’s litigation.”

Clear and detailed invoices help clients understand what they are paying for and reduce the likelihood of disputes. This level of detail reassures clients that they are being billed fairly and accurately.

Communicating Fees to Earn Your Client’s Trust

When it comes to money, clients want a full accounting of the fees and expenses associated with their matters. Clients need to know if your fees are reasonable and justified, and they want to see a clear breakdown of every cost. This boils down to one critical question: “Are you giving me more than I’m paying you?” The answer should always be a resounding yes.

This is where effective time and expense tracking comes into play. By using software like Bill4Time, you can effortlessly manage and communicate your billing processes. It helps you track billable hours, categorize expenses, and generate detailed, itemized invoices that clients appreciate. With such clarity and transparency, you build trust and confidence in your services. So why not give it a try? Your clients—and your bottom line—will thank you.