Five years ago, the Australian Legal Services Commission published a "Billing Practices Guide" to recommend best practices. The best practices guide was based on the Legal Profession Act of 2007, Australian Consumer Law, and Australian common law.
The need to scrutinise bills has given rise to a cottage industry of legal audit firms. These new companies have made a business of reviewing and analysing the bills sent to clients from their legal representatives to target discrepancies. If a company does not hire an outside consultant they will generally have in-house staff do it.
Best Billing Practices
Lawyers should always provide complete estimates with enough detail for clients to make decisions about the services. The fees should not be excessive. Lawyers should give their clients valid costs disclosure. They should ensure that their costs agreements with clients are both fair and reasonable.
Lawyers should not be misleading or deceptive. Lawyers should make sure their contracts are fair. There should be no undue harassment or coercion in regard to demanding payment. Major legal action (where the amount payable is over $40,000) should be provided with particular care and skill, fit the purpose of the action, and that the client can reasonably expect to achieve the desired results within a reasonable time.
All costs that show up on the bill have to be properly chargeable. Only costs for actual legal work should be billed. Lawyers should only charge for work that is done within the limits of their retainer and only work that benefits the client, not the lawyer. Lawyers should not charge for costs due to the lawyer's mistakes, negligence, or misconduct. Lawyers who bill for time should present bills on an accurate time-coded basis reflecting the actual time spent. There should be no use of a time billing more than once.
Common Billing Concerns
With the standards in mind, certain billing errors are still regularly found. These kinds of billing errors account for 90 percent of the complaints made by legal clients and auditing teams.
- Inaccurate or vague item descriptions. Unless the client knows precisely what he or she is being billed for there is always going to be a question about the bill. Activity should be clearly identified and explained in the task description. Items like "review and revise" may bring client concern.
- Padding time. Adding more time to the billing than the action actually took, especially if the lawyer is an especially fast and efficient worker invites scrutiny and criticism from the client.
- Economies in disbursements. Where the costs of disbursements like couriers and expensive third-party vendors are excessive and not reflective of clients needs often question the costs.
- Charges for administrative work. Most clients resent paying for administrative and clerical costs, especially costs related to the billing and invoice preparation. Using senior staff to do administrative tasks at a high hourly rate is a certain red flag. Tasks should be billed at a rate appropriate to the level of seniority required.
- Charging for interoffice conferences. These costs can be significant and most clients think they should be considered part of the firm's overhead and not billable to clients. Similarly, clients are not usually willing to pay for training. Clients feel that staff working on their behalf should be sufficiently trained.
How Does LawMaster Help?
LawMaster works in real time. Its' intelligent matter management solutions record your billables as you complete them. Your billing reflects your time coded diary of actions and duration. Matters are managed in this way as well as costs, workflow, task management, and critical dates. Little time is wasted in moving paper and professionals from place to place because LawMaster runs on the cloud. Documents, comments and collaboration can proceed on any device anywhere in the world.
LawMaster's Law Practice Technology can increase your firms efficiency by at least 30%. Contact us to learn more.