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    The 5 Most Common Time and Billing Mistakes and How to Avoid Them

    The 5 Most Common Time and Billing Mistakes and How to Avoid Them

      It’s ideal for law firms and their clients when itemizations on invoices are clear, transparent, and accurate. But let’s be honest—that just isn’t always the case.  

      There are a lot of things that can go wrong with invoices. Undercharging leads to lost profits for the firm. Overcharging, or bill padding, can lead to loss of client trust and, in some circumstances, even disbarment. And there’s a whole range of small oversights and errors that can crop up in a billing cycle, too.  

      Unfortunately, even unintentional invoicing mistakes can lead to serious problems down the road.  

      So let’s avoid all that mess, and take a look at how NOT to bill time for clients. Your clients and your accounting team will thank you! 

      Watch out for these five common time and billing mistakes 

      Lawyers often focus so much on billable hours that the non-billable administrative tasks may fall by the wayside. But when you skimp on admin time or try to cut corners, time and billing mistakes are more likely to occur.  

      That’s why legal practice management software is so important. Accurate and prompt time-keeping and billing practices will save you so much extra work (and so many unnecessary headaches) down the road.  

      In the meantime, here’s a roundup of our top time and billing mistakes (and why they matter).  

      1. Not keeping time records in real-time 

      Lawyers often focus so intently on client work that they can lose track of what’s going on around them—including the time they’re supposed to be tracking. But waiting until the end of the day (or week) to compile and account for your valuable time can lead to some serious time-tracking errors.  

      According to the ABA, lawyers who wait until the end of the day to track their time can lose 10% of their billable time. And for those who wait until the end of the week to account for their time, that number goes up to a whopping 25% of billable time lost.  

      Not only does this impact your firm’s bottom line, but it can also lead to inaccurate project management down the road. Without accurate records of how long certain tasks or client matters take, your firm could run into: 

      • Too many clients or projects 
      • Inaccurate resource allocation  
      • Incorrect service fee structuring  

      Instead of tracking your time at the end of the day, track your time as you work. But tracking via paper and pencil isn’t exactly the most convenient option—it creates data entry redundancy and more work down the line when you have to enter your time into your system.  

      Instead, consider working with legal practice management software that offers automated time-tracking features. With automated time tracking, team members can track time by case matter and easily integrate their time tracking with your billing system to provide accurate, seamless time tracking records.  

      2. Bill padding

      While under-billing can affect your firm’s profits, over-billing or bill padding can lead to significant conflict with clients as well as disciplinary measures from the American Bar Association.  

      Clients come to you for help, and they trust that you will act in their best interest. If a client finds that you are padding their bill or charging them unreasonable fees, they will no longer trust your ability to act in their best interest. And once that trust is lost, it’s almost impossible to get back.  

      Per the ABA, padding your billable hours can lead to ethical dilemmas, disciplinary measures, and even disbarment—not just for your law firm’s partners, but for every team member at your firm.  

      Model Rule 1.5 states that firms can only charge “reasonable fees.” If an associate charges a client unreasonable fees, they will be held accountable, even if they were directed to do so by a supervisor. 

      So how can you avoid unintentional bill padding? Alongside automated time trackers, the ABA suggests that legal staff (and especially new lawyers) review each bill carefully to avoid bill padding, incorrect rates for different tasks, or duplicate charges.

      3. Charging the same rates for different tasks 

      While every team member is essential to case matter management, not all tasks are charged at the same hourly rate. Administrative or clerical tasks shouldn’t be billed at the same rate that partners or associates charge for work that only they can do.  

      This can be an issue for solo or small firms that don’t have a large admin team or paralegals. If you provide an itemized bill for your clients, they might balk at paying the same amount for 10 minutes of administrative work compared to 10 minutes of drafting a will, prenup, or divorce agreement.  

      For small firms where attorneys often contribute to clerical work, consider creating separate time-keeping codes for administrative or paralegal billable work, to create a clear separation and demonstrate to clients that you’re intentional about not overcharging them.  


      Demystifying the Billable Hour: How to Right-Size Your Rates

      With prices rising so much over the last year (global inflation is forecasted at 8.8% in 2022), it’s the right time to look at your current rates and see if you’re charging enough to remain profitable.

      4. Vague invoicing 

      No one likes complicated and unclear invoices. Just as no one wants a $6,000 bill from the hospital that just says “tests,” no one wants a $6,000 bill from their lawyer that just says “casework.”  

      When you’re charging hundreds of dollars per hour, it’s reasonable for clients to want to know what they’re paying for. But it’s not enough to simply list all the tasks you completed. You also have to include specific details on the subject matter, as well as how much time you spent on each task. Otherwise, a fee arbitrator could call you out on your client invoice.  

      To protect your firm and ensure transparency for your clients, provide a clear and succinct description for each task on your bill, as well as how much time was spent on each specific task. This will prevent awkward conversations down the road. Plus, clients will be more likely to pay their bills on time when they know what they’re paying for. 

      5. Errors on finalized client invoices 

      Even simple billing mistakes can raise doubts about the accuracy of your invoices and undermine your client’s trust.  

      Instead of creating invoices manually each month, which can expose your firm to the risk of human error, use legal practice management software with integrated billing and invoicing 

      With batch billing, automated payments, and invoice drafts that pull from automated time trackers, teams can spend their time reviewing invoices for accuracy, rather than drafting them in a rush.  

      Prevent billing errors, maintain client trust, and protect your firm’s reputation—what’s not to love?  

      Track time and bill clients with confidence with Rocket Matter 

      Law firms shouldn’t have to maneuver around legal landmines to bill their clients with confidence. Rocket Matter’s legal practice management software features the time tracking and accounting integrations you need to streamline client invoices and ensure accurate billing practices.  

      Looking for peace of mind? Schedule a demo with Rocket Matter or start your free trial to see just how easy and accurate billing can be when you have the right tools in hand. 

      Demystifying the Billable Hour: How to Right-Size Your Rates

      With prices rising so much over the last year (global inflation is forecasted at 8.8% in 2022), it’s the right time to look at your current rates and see if you’re charging enough to remain profitable.

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