Most people understand that a client will be expected to pay a hefty fee for an attorney’s advice. However, most people don’t understand exactly how that fee is calculated. Since legal advice is becoming increasingly expensive, it is important for clients to understand how they are being billed. This helps to protect the client from overpaying as well as the attorney from committing an ethical violation.
What is a Billable Hour?
Attorneys bill clients depending on the number of hours that they work on a client’s case. On average, attorneys bill approximately 1800 hours per year. However, many firms encourage attorneys to bill more by providing financial incentives for exceeding the 1800-hour bench march. This is commonly referred to as the “golden handcuffs.” This means that an attorney who bills feels pressure to work more hours in order to make more money.
Most attorneys divide their time into increments of 6 minutes and then round up as necessary. For example, A calls a witness for C’s case but no one answers the telephone. A then leaves a voicemail for the witness. In total, this task only took A 5 minutes. However, A will still bill C for 6 minutes. While this is common, there are many different billing practices that vary depending on the law firm and attorney.
Billable hours are controversial for several reasons. First, billable hours must be tracked methodically. This means that attorneys frequently spend as much time calculating and logging billable hours as they spend working on a client’s case. Second, billable hours encourage law firms to overwork their attorneys, even though the attorney will not receive the total amount that they bill. Generally, firms divide up the billable returns among the partners and associates. Third, the billable system encourages fraud among attorneys. Many attorneys over bill clients and put themselves in risk of criminal and civil sanctions as a result of the system.
Contractual Billable Hours
Whenever someone hires a private attorney, there is generally a contract that governs the payment. This contract will specifically spell out the increments that the attorney bills, how the attorney keeps track of billables, what work a client can expect to have billed and the payment schedule. Contracts like this are important so that both the client and the attorney understand the procedure in advance of any payments. Furthermore either party can refer to the legally binding contract to resolve future disputes.