Practical Law Office Management 4e Cynthia Traina Donnes - Test Bank
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Practical Law Office Management 4e Cynthia Traina Donnes - Test Bank

Practical Law Office Management 4e Cynthia Traina Donnes - Test Bank   Instant Download - Complete Test Bank With Answers     Sample Questions Are Posted Below CHAPTER 5 L EGAL FEES, T IMEKEEPING, AND B ILLINGOVERVIEWTimekeeping and billing are extremely important for all law offices. This chapter introduces thestudent to the many types of …

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Practical Law Office Management 4e Cynthia Traina Donnes – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

CHAPTER 5

L EGAL FEES, T IMEKEEPING, AND B ILLING
OVERVIEW
Timekeeping and billing are extremely important for all law offices. This chapter introduces the
student to the many types of fee agreements, how the billing process works, the ethical
considerations of time and billing, and some coverage of manual and computerized systems.
LEARNING OBJECTIVES
After reading this chapter, the student should be able to:
Differentiate between timekeeping and billing.

Chapter 4: Client Relations and Communication Skills 55
© 2017 Cengage Learning ®
. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
F. Prepaid Legal Services
1. Prepaid legal services are plans that a person can purchase that entitle the person
to receive legal services (as set out in the plan) either for free or at a greatly
reduced rate.
IV. Value Billing
1. The value billing concept represents a type of fee agreement that is based not just on
the time required to perform the work but also on the complexity of the matter and
the expertise of the attorney required to perform it. Value billing typically provides
that the attorney and client reach a consensus on the amount of fees to be charged.
V. The Ethics of Timekeeping and Billing
A. Ethical Considerations for Legal Fee Agreements
There are more timekeeping- and billing-related ethical complaints filed against
attorneys and law offices than all other types of complaints.
56 Chapter 5: Legal Fees, Timekeeping, and Billing
© 2017 Cengage Learning ®
. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. Criminal fraud is a false representation of a present or past fact made by the
defendant, upon which the victim relies, resulting in the victim suffering
damages.
E. Ethical Problems
Difficult ethical billing problems that come up include the following:
1. Billing two clients for the same time, or “double billing”—This happens when the
timekeeper is traveling for one client and works on another client’s case during
the travel, for instance. The prudent thing to do is to bill one client or the other
client for the time, or to split the time between the cases, but it is not prudent to
bill both cases as full time.
2. When billing by the hour, is there an ethical obligation to be efficient?—Law
offices should not “milk” their clients. Law offices and timekeepers should work
efficiently. If the attorney or paralegal works so inefficiently that the fee is no
longer reasonable, a violation of the ethical rules will have taken place.
3. Should paralegals bill for clerical or secretarial duties?—Paralegals cannot bill
clients for clerical duties.
4. Should the client pay for the mistakes of the law office?—The prudent thing to do
is to not bill clients for mistakes. Clients come to attorneys because attorneys are
the experts.
5. Should a task be assigned to less expensive staff when possible?—Yes; clients
should not have to pay for attorney time when the work can be provided by a
paralegal.
VI. Legal Expenses
A. In addition to recovering for legal fees, law practices are also entitled to recover from
clients the reasonable expenses that are incurred by the office in representing the client.
B. Copying costs, postage, long-distance phone calls, court fees, and travel expenses are
common expenses for which clients reimburse law offices.
C. In cases involving litigation, expenses alone can exceed tens of thousands of dollars.
VII. Timekeeping
Timekeeping is the process of tracking what attorneys and paralegals do with their time.
A time sheet or time slip is where legal professionals record information about the legal
services they provide to each client.
A. Manual and Computerized Timekeeping
1. There are several different types of manual timekeeping systems. Most systems
allow the timekeeper to record his or her time chronologically, and then separate
the sheets and file them with each case.
2. Some timekeeping and billing programs provide assistance in keeping track of
time. This usually consists of using the computer to track the time spent on a
case, by turning the “meter” on and then off when you are done.
Chapter 4: Client Relations and Communication Skills 57
© 2017 Cengage Learning ®
. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
B. Billable v. Nonbillable Time
1. Billable time is the actual time that a paralegal or attorney spends working on a
case, which is directly billed to a client’s account.
2. Nonbillable time is time that cannot be directly billed to a paying client, such as
general or administrative activities for the firm, personal time, breaks, and pro
bono work.
3. Pro bono work is legal services that are provided free of charge to a client who is
not able to pay for the services.
4. Exhibit 5-8 shows some common billing complaints of corporate law departments.
C. Minimum Billable Hours
1. Most law offices have a minimum number of hours that paralegals must bill every
year. Billable hours are typically between 1400 and 1800, though they can be
higher in some offices. Exhibit 5-14 shows expected billable hours for paralegals.
2. Paralegals should always track how much time they are billing to see if they are
complying with the minimum number of hours, and they should not wait until the
last month of the year to find out they have not billed enough time.
D. Recording Time
1. Time is usually billed in either six-minute intervals or in quarters.
Six-Minute Intervals
0–6 minutes = .1 hour 31–36 minutes = .6 hour
7–12 minutes = .2 hour 37–42 minutes = .7 hour
13–15 minutes = .25 hour 43–45 minutes = .75 hour
16–18 minutes = .3 hour 46–48 minutes = .8 hour
19–24 minutes = .4 hour 49–54 minutes = .9 hour
25–30 minutes = .5 hour 55–60 minutes = 1.0 hour
Quarter Intervals
0–15 minutes = .25 hour
16–30 minutes = .50 hour
31–45 minutes = .75 hour
46–60 minutes = 1.0 hour
E. Timekeeping Practices
1. Tips on timekeeping include:
• Find out how many hours you must bill annually, monthly, and weekly up
front, and track where you are in relationship to the quota.
• Find out when time sheets are due.
• Keep copies of your time sheets.
• Record your time contemporaneously on a daily basis.
• Record your actual time spent, and do not discount your time.
• Be aware if billable hours are related to bonuses or merit increases.
58 Chapter 5: Legal Fees, Timekeeping, and Billing
© 2017 Cengage Learning ®
. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Be ethical.
• Be aware of things that keep you from billing time.
VIII. Billing
A. Paralegal Profitability
1. It is profitable for law offices to hire paralegals because their time can be charged
to clients, they do not earn a share of the law office profits, and they are less
expensive to employ than associate attorneys.
2. Clients like paralegals to work on their cases as well, because their fees are much
lower than attorneys’ fees.
3. The U.S. Supreme Court case of Missouri v. Jenkins (1989) allowed a law firm to
recover the market value of the firm’s paralegals’ time when receiving
“attorney’s fees” under a federal civil rights statute. Because the case was specific
to a federal civil rights statute, other courts using other statutes and circumstances
may not follow this ruling. However, it is the trend to allow recovery for
paralegal time.
4. Exhibit 5-15 shows average paralegal billing rates by region.
B. Leveraging and Setting Hourly Rates
1. Leveraging is the process of earning a profit from legal services that are provided
by law office personnel, including partners, associates, and paralegals.
2. Leveraging allows the law office not only to recover the cost of an attorney’s or
paralegal’s salary but also to pay overhead expenses and make a profit on each
person billing.
C. Manual Billing Systems
1. Manual billing systems usually include typing billings on typewriters or word
processors. The problem with manual systems is that it takes a lot of time to bill
manually; when invoices are late going out, the payments are late coming in, and
the office may experience cash flow problems.
D. Computerized Billing Systems
1. Computerized billing systems are widely available, and many are very
inexpensive. Often they can produce invoices very quickly and help to solve cash
flow problems in many offices.
E. Timekeeping and Billing Cycle
1. The timekeeping and billing cycle in many offices is as follows:
a) Client and attorney reach an agreement on legal fees.
b) Attorneys and paralegals perform legal services and prepare manual time
slips.
c) Time slips and out-of-pocket expense slips are entered into the computer.
d) Pre-billing report is generated and reviewed by managing attorney.

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