Billable Hours

SmallLaw Billing Maxims (i.e., Get Paid!)

Some tips and tricks that will keep your clients happy and help you get paid quickly.

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Billing is the bane of my existence. If it were up to me, all I would do all day would be run, talk to clients, and draft agreements. I hate the billing and the invoicing part of the job. I’m not the first attorney to say this.

Back in Biglaw, I used to complain about having to enter in my time every week. Like that was so hard! I mean, it wasn’t exactly easy, given the rather crushing workload associates face, but once I put in all the entries, that was it. Unless I did something wrong, that was the last of it.

Not in SmallLaw. In SmallLaw, the time entries are just the beginning. Then you have to go through everyone else’s entries (assuming you have a team), go back and check whatever your arrangement is with the client (which may involve going back through emails to see if you promised a certain task at a certain price), write off whatever time is necessary, run the invoice, review it, send it to the client, and then make sure the client pays it. All of this is time-consuming and non-billable. Compared to all this, entering in time entries and being done with it is a breeze!

In the past few years in SmallLaw, I’ve discovered a few maxims about billing, that perhaps knowing from the beginning (some I did know, I just didn’t appreciate) would have been helpful.

  • The longer you practice, the less concerned you with bringing people in the door, and the more concerned you are with being compensated for the work you do. The people who have been at this for a while all charge a retainer, which gets replenished every month. If a potential client doesn’t want to pay a retainer, the seasoned lawyer is fine with that person moving on. As my partner says, “I’d rather watch TV, play with my kids, or go to the gym instead of doing work for free.” Not that everyone who doesn’t want to pay a retainer expects work for free, but clearly the odds of getting paid are much better if you have a retainer from the client sitting in your trust account.
  • It is difficult to impose different billing terms on longtime clients. Maybe at first, you offer sub-market rates and don’t ask for a retainer because you’re trying to build a book of business. When you become successful, are you going to be able to tell these clients that after three years, now you need a retainer? That they’ll need to replenish every month? And that they should be paying you x per hour instead of y? Might be better to figure out a firm billing practice right off the bat, and then stick to it.
  • Unless it’s a large amount, the few clients that don’t pay are best written off. Obviously your best clients are paying. I used to have 2-3 clients that paid the bills, and then everything else was gravy. If one of these “gravy” clients would start arguing over the bill, I would usually end up not responding to their emails, and not even necessarily on purpose. It’s a huge time suck having to chase down clients for money, and since typically the bills for non-paying clients are small, chasing them down is so far down the to-do list it doesn’t get done.
  • Hourly rates aren’t a huge deal. Everyone wants an estimate for how much something will cost. However you get there is up to you. If you tell the person it’s going to cost $1,000 and it only takes you an hour, more power to you.
  • That said, hourly billing is the most fair way for lawyers to get paid. When I see an attorney on LinkedIn or elsewhere talk about how they do flat fees, I immediately think the person is either inexperienced, or is handling really simple stuff. In reality, it is rare that a matter turns out to be exactly what someone says it’s going to be. Not because the client is trying to put one over the attorney, but rather, because no one knows with perfect certainty what will happen in the future, and things come up and minds get changed.
  • The best solution for the “I have to have a flat fee” folks is to give them a flat fee but put a cap on hours. Otherwise, you can get into situations in which someone thinks everything is covered under the flat fee — unlimited consultations, unlimited changes, and I’ve even had people try to say they thought additional contracts were covered under the flat fee. I’m like, “You cannot be serious.”
  • Billing entries are very client-specific. At one of my Biglaw firms, there was a rule that you had to have one line of text for every 30 minutes. So if the agreement took two and a half hours, you had to have five lines of text. At my most prestigious Biglaw stop, they had no such rule and no one seemed to care about the description, as long as the time was entered and was plausible. SmallLaw is somewhere between the two. If the amount is reasonable (to the client, not you), it’s unlikely anyone will read the descriptions. The only people I’ve had really pore over the billing descriptions were people who were disputing the bill. Some clients pay so fast I know they can’t be reading the descriptions — they just trust me.

And at the end of the day, that’s what it’s all about: trust. Some people complain about attorney billing practices, such as hourly billing, but I’m convinced the vast majority of attorneys are trustworthy. I have to believe the number of attorneys who pad hours is very small. If a client doesn’t trust that an attorney is spending the time on the client’s matter that he says he is, then the relationship is broken, and the client is better off going elsewhere. Cultivating that trusting relationship with clients is a key driver in growing a SmallLaw practice.

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Gary J. Ross is a partner at Ross & Shulga PLLC, which he co-founded in 2017 after running his own firm for four years and after several years in Biglaw and the federal government. Gary handles corporate and securities law matters for venture capital funds, startups, and other large and small businesses, as well as investors in each. You can reach Gary by email at Gary@RSglobal.law.

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