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Billing Judgment: The Most Important Factor to a Fair Legal Bill

May 30, 2012

Of all the factors and variables that are important in determining the amount of legal fees incurred in any given matter, billing judgment is likely the most important.  Broadly speaking, billing judgment refers to the judgment an attorney must exercise to meet their ethical obligation to their client to only charge for fees that are reasonable.  In practice, billing judgment should be used to adjust or write down fees that were actually incurred, but were excessive, duplicative, or unnecessary.  Common examples include hours incurred by younger associates that are more properly considered training, time spent by the attorney to redress an error or mistake caused by the attorney, and attorney time spent doing tasks that could have been handled by a legal secretary.

Good billing judgment results in a fair bill.  At its most basic level, it involves the attorney making a judgment call on what is a fair or reasonable price for any given task.

Thus, where a newer associate spends 10 hours (@ $250 per hour) researching and preparing a basic motion that the partner could have prepared in 3 hours (@ $500 per hour), good billing judgment requires that the client’s final bill should be for $1,500 and not $2,500, even though the younger associate actually spent the time billed. Taken further, if the partner has a senior associate who could prepare the same motion in 2 hours (@ $350 per hour), billing judgment should result in the final bill being for $700, regardless of who did the work.

Without good billing judgment, overbilling and billing abuse can run rampant.  In the above example, the client might see a final bill for the same motion upwards of $3,850.  The newer associate’s bill is fully billed ($2,500), the senior associate and partner each bill one hour of review and revision ($850) and the newer associate compiles the exhibits, which should have been done by the legal secretary, for an additional 2 hours ($500) – for a motion that could and should have been done reasonably for $700.

Just one example of why good billing judgment can have a huge impact on your bottom line. For further information on billing judgment, click here.

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