Engaging Counsel without the Benefit of Billing Guidelines – an Invitation to Conflict?

May 29, 2024

Let us suppose that you have selected a law firm to handle a particular matter. The firm will then provide you with their engagement letter. Typically, that document will include the hourly rates the firm will be charging and a general statement of the work that will be billed—“all time spent on your matter, including phone calls.”

Invariably, what is going to be missing in that document is any detail as to how the firm will bill the client, other than that they will bill them monthly, etc., as well as both the form and substance of how they bill the client:  

  • Will their time be recorded in tenths of an hour (0.10, 0.20, 0.30, etc.) or quarter-hour (0.25, 0.50, 0.75, etc.) increments?
  • Will their communications require stating the subject matter and conferences involved?
  • Will their task descriptions include enough detail to explain what legal work they did and why they did it?

Chances are extremely high that none of the above will be addressed.  

Why is that a problem? The standard of reasonableness1 may still be met, but lack of agreement on those details (and more) only advantages the firm, and therefore does nothing to put the fee-paying client on an even playing field.

Billing Guidelines are the client’s answer to the firm’s engagement letter. It is a sort of client “Bill of Rights” when it comes to what is expected regarding law firm billing, enumerating the specifics of what makes an invoice acceptable or not.2

For instance, most billing guidelines will prohibit ‘block billing’—which is lumping together all the work performed by a given attorney or paralegal in a single day and then assigning a single amount of time/fee for all that work. This leaves the client with no way to assess the time spent on individual tasks.  

Other common provisions include how many people can bill for office conferences or attending hearings or depositions, directives that attorneys should not perform paralegal work, prohibitions against invoicing clerical or administrative tasks (including examples of what those tasks are), limitations on research, as well as how much time an attorney or paralegal can bill in a single day, to name just a few of the topics most billing guidelines cover.

Most Fortune 500 companies and insurance carriers have billing guidelines requiring the engaged firms to abide by them. Why? Because they want to set the expectations for fairness and accountability in billing and avoid conflict when issues arise. The client is then in the best position to challenge inadequate billing and can point to the guidelines as the understanding between parties as to the form and substance of the expectations agreed on.

Disagreements on billing issues are common. Clients who do not have billing guidelines are at a disadvantage. Sure, they can always challenge billing they find to be problematic. However, working through those issues is far easier when an understanding is in place.

As a consumer of legal services, one of the best things you can do to protect your interests and avoid/minimize future conflicts is to obtain billing guidelines for yourself or the organization. It is a minimal investment that can yield savings and provide peace of mind that your interests are adequately represented.

Our team of experts at Alan Gray and SIMS can develop and incorporate your Billing Guidelines into a legal expense management review program, allowing your investment to yield results and optimize the efficacy and efficiency of a legal bill audit.

As you review the effectiveness (or lack) of your Billing Guidelines, consider a consultation with one of Alan Gray’s attorneys. Our team can work with you from the ground up to build an effective framework of Billing Guidelines or identify and remediate inconsistencies or gaps in current rules. Let Alan Gray incorporate your Billing Guidelines into an effective legal expense management program.

1  Rule 1.5: Fees (americanbar.org) “A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.”

2 Defining the Firm’s Legal Billing Guidelines (natlawreview.com)  

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