First, I’d like to thank all the people who offered to write a rebuttal to my last column, particularly ex-girlfriends of mine. Sadly, ATL doesn’t do one-off guest posts, so we’re just going to have to go with the lawyers being good at sex theory.
Back to the more mundane matters of running a small law firm. When you move from Biglaw to SmallLaw, you have to make some decisions about billing. I’ve written before about setting your billable hour rate. But billing rate is only part of it. What exactly are you going to bill for? Obviously, you’re going to bill for time spent actually working on the matter (drafting the contract, doing the research, writing the memo, etc.). Writing out an email your client can refer to now and in the future is billable, as is delivering the news to the client on the phone, or answering questions about your research. But what if your client can’t access her email for some reason and needs you to give her an office address she included in an email to you a week before? What if it’s your office address she needs? Are you going to bill her for that? Last year a non-profit client needed me to fax something for them, to some stone-age government agency that hasn’t quite figured out how email works. There was a minor issue with the transmission, so instead of a couple of minutes, it took 10. Would you have billed the client for that?
Your personal billing philosophy is something you have to decide when you open up your own shop. If you’re like me, you may not decide it until you’re sending out your first few bills. Since I find what I call “petty billing” distasteful, I generally only bill for tasks that either require me to do research, or take more than 12 minutes to complete (the latter being a holdover from my Biglaw days). If it’s really a quick question like, “have you heard from FINRA yet?”, I’m probably not going to bill for typing out “no.” (Plus the hassle of creating a billing entry for that isn’t really worth it.) If it’s “have you heard from FINRA, tell me what we should do now, and answer these 10 follow-up questions,” I’m definitely billing for that.
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A few years ago, I was in a bar beside a guy who managed the staff at 15 Central Park West, where a lot of celebrities and hedge-funders live. He said he regularly fields phone calls from residents questioning small charges on their bill. Small as in 10 or 11 dollars. Can you imagine Denzel Washington going over a bill line-by-line and circling any charge he doesn’t understand? “While I spent the last three months shooting a movie that paid me $20 million, you shameless opportunists tried to get an extra $11 out of me!” Apparently it happens.
The point is no matter who it is — and you may recall a couple of weeks ago I talked about millionaire clients — odds are someone will be going over your bill. Do you really want to be sending a client a bill with numerous “Email correspondence with D. Washington” entries when the emails were simply going over times you could meet or advising as to when you’d be finished reviewing a contract?
You can. You can charge for anything, as long as you’re not making stuff up. If you want every second of your workday to be billable, then by definition you have to bill for every second, no matter how trifling the task. Client wants you to say a few words to her nephew about a career in law? Sure, but the clock is ticking.
Some lawyers brag about billing for everything, whether it’s petty or not. Every phone call, every staple. In Biglaw, attorneys can charge for every minute because there’s support staff to handle tasks considered non-billable (e.g., faxing government agencies). In a small firm, you have to use your judgment as to what’s billable and what’s not.
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Not too long ago I had a client who, when he sent me the final payment, made it a point to thank me for not nickel-and-diming him for every phone call and email. He promised to keep me in mind for future work. Two days later, I got the call. (“Bet you didn’t think you’d hear from me so soon, eh?”) Sometimes the question boils down to this: do you want the extra $60 from a 10-minute phone call, or the $6000 next matter?
Gary J. Ross opened his own practice, Jackson Ross PLLC, in 2013 after several years in Biglaw and the federal government. Gary handles corporate and compliance matters for investment funds, small businesses, and non-profits, occasionally dabbling in litigation. You can reach Gary by email at [email protected].