Billable vs. Non-Billable Time: What’s the Proper Rule?
Here are a few general rules you can follow for differentiating between billable and non-billable time.
One of the thorniest issues when it comes to making a decent living as a lawyer is figuring out what is properly categorized as non-billable time. You don’t want to spend your day helping clients—even indirectly—and not getting paid for your efforts. On the other hand, if you overcharge for what is legitimately viewed as non-billable time, you are going to face some serious non-payment challenges.
The bulk of your work will clearly fall into one slot or the other. When you are talking or meeting with clients or with other attorneys on matters directly related to client work, that time is no doubt billable. When you are drafting or reviewing documents required to meet your client duties, that’s billable. Presenting your case in court is certainly billable. At the other extreme, marketing your services to a potential client or most intake interviews are not billable, nor is your time attending core educational classes, even when they may advance your competency to the benefit of your client. Likewise, compiling bills or dealing with client complaints is not billable time, nor is office management and equipment acquisition and training.
Unfortunately this leaves a great variety of work in the middle of these clearly distinct divisions. Here are the general rules that I have followed for the most frequently arising “middle zones” of this territory.
- Client-related educational time. No matter how much you keep up with the legal literature, most client work will require some additional focused research or education. Sometimes it’s case research, sometimes it involves consulting with an expert. It may even require a visit to a courthouse to watch how someone else handles a particular case. The key to sorting through this question is whether the knowledge is something that is reasonably expected of someone who bills at your hourly rate and has your level of experience – and if so, then gaining the knowledge is not billable. But if even someone at your level would need to do the research, it’s billable time.
- Big picture client discussions. Whenever I handled a complex litigation matter, I would take an hour or two every few months to meet with my client for a general discussion of the case and their concerns. Sometimes this happened over lunch or at their home, in a setting that allowed for a broader sort of conversation. While in some ways this might be considered billable time, I generally did not bill for this time, simply because it greatly solidified my ongoing relationship with my client. If they are already paying me $50,000 or more to handle their case, spending two non-billable hours every few months seemed like the right thing to do.
- Personal development time. Whether you handle administrative hearings or tax appeals or divorces, there will be days when you know you need some back-up training. For some it will be therapy or emotional support, for others it will be classes in office administration or communication skill development. No doubt this work will improve your performance, to the benefit of your client, but it’s not billable time. It certainly can justify an increase in your billing rate, and that’s the way to handle the financing of these activities.
- Practice set-up and training. Not billable, sorry, even if it helps your client. If you are enabling your secretary to take on paralegal work, then the client-focused paralegal time is billable at paralegal rates – but not the training that enabled the secretary to do the task. If a big litigation matter requires a new and improved computer system, you can charge a higher hourly rate for your legal work – but you can’t charge the client for the time you spent acquiring and mastering the computer program.
- Talking with staff or consultants. This is one of the trickiest areas, and is one of the greatest sources of billing disputes. Lawyers in large firms often spend time talking with associates or partners about the matter, and end up charging for both professional’s time. For those of us who work on our own, we may turn to other lawyers or professionals to help us sort through a particularly thorny issue. Again, my philosophy is that if the topic of conversation is something that I should already understand, given my education and experience level, I can’t charge for the “double checking” that I feel the need to do. For the same reason, if the other lawyer or consultant bills me for their time, that’s my bill to pay, not the clients. On the other hand, where there is an exceptional situation—a complex child support question, for instance—and it would be more expensive for me to learn the answer all on my own, billing the client for a short consultation with a recognized expert is wholly appropriate.
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
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