Legal billing is challenging due to its dual demand for precision in both legal services and financial documentation. Any errors in billing can cause client disputes, negatively affect a firm’s reputation, or even cause a malpractice claim. And considering that 77% of lawyers bill their clients hourly, the need for streamlined timekeeping and billing solutions is clear. 

Legal billing software proves essential here, offering the necessary framework to manage these issues efficiently. Certain legal billing software for small firms and large firms simplifies the complexity of tracking minute details in billing and ensures that any size practice can maintain accuracy with ease. 

This blog will explore how such software can support the nuts and bolts of billing at a law firm, creating invoices, and identifying billable tasks, aimed at optimizing the billing process for better efficiency and client satisfaction.

What Does Legal Billing Entail?

Legal billing is typically executed in one of several ways, with the most common being hourly billing. This method requires lawyers to log each hour they work on a case, making detailed notes about the activities they perform. Here’s what the process often entails:

• Rate Setting: First, attorneys must determine a fair and competitive billing rate that reflects the quality and complexity of the services they provide.
• Time Tracking: Attorneys document the time they spend on different tasks, whether it’s researching, drafting documents, or making court appearances. They usually break down the time they record into 6-minute increments.
• Expense Tracking: In addition to time, attorneys must track all expenses related to client work. These expenses include costs for things like photocopying, travel, postage, and court fees.
• Itemization of Services: Every invoice should clearly itemize the services provided, with each entry showing the date, the nature of the task, and the time spent.
• Tracking Non-Billable Hours: Not all firms track non-billable hours, but it can be helpful for internal analysis, such as determining which administrative tasks take too much time away from billable hours.
• Billing Cycle Management: Law firms generally have a regular schedule for sending out invoices, typically monthly. Efficiently managing this cycle ensures that clients are aware of how much money they are spending each month on their case.

For attorneys considering a switch to billable hours, or for those entering the legal profession, understanding the intricacies of this process can significantly impact both client relations and the bottom line.

Is Legal Billing Hard To Learn?

Legal billing might seem daunting at first, especially when transitioning to a system based on billable hours. This approach requires detailed logging of all time spent on various legal tasks, from drafting documents to client consultations. 

For those new to this system, whether you’re an experienced attorney, a recent law graduate, or wondering how to become a legal billing specialist, here are the most common challenges you will encounter and how to solve them:

Accurate Time Tracking

Challenge: You might find it tedious to record brief yet frequent tasks, such as quick client calls or multiple, short email exchanges. The fundamental challenge is ensuring each minute spent on legal work is recorded accurately. Inaccurate tracking can lead to billing disputes with clients and revenue loss for the firm.

Solution: How do lawyers bill hours accurately? With law firm software like PracticePanther. Users have the option of tracking time with simple start-and-stop timers or entering time manually. You can also use PracticePanther reports to find tasks you may have forgotten to bill for.

Categorizing Billable Activities

Challenge: Especially for newer attorneys or support staff, determining the billability of varied tasks, like client communication or administrative coordination, can be perplexing. This often leads to inconsistencies in billing practices across the firm.

Solution: Define and implement firm-wide standards for what constitutes a billable task using a platform that allows for easy task categorization. PracticePanther enables firms to pre-set these categories and associate them with specific matters or cases, which simplifies the billing process and helps maintain consistency across all cases.

Creating Detailed Invoices

Challenge: Generating detailed invoices that clearly and accurately reflect the value of work done without getting bogged down in minutiae is critical. Clients often scrutinize invoices for transparency and justification of the charges.

Solution: Leverage a billing system that compiles detailed yet concise invoices directly from your tracked time entries. PracticePanther easily generates invoices that itemize services by date, task, and duration, accompanied by descriptions that are both client-friendly and reflective of the work’s value. This clarity increases client trust and reduces the likelihood of disputes.

Maintaining Ethical Billing Practices

Challenge: Upholding ethical standards while ensuring that billing reflects the true scope of work can sometimes create conflicts, particularly in high-stakes or complex cases where you might need multiple billing approaches.

Solution: Create a time entry approval process workflow in PracticePanther. Supervisors can review and approve time entries before invoicing, ensuring accuracy and ethical billing. Using a workflow like this reduces errors in legal billing.

Client Communication About Billing

Challenge: Discussing financial matters can be delicate. Lawyers must convey their billing logic without causing misunderstandings.

Solution: Adopt a platform that offers an integrated client portal for billing transparency. PracticePanther’s client portal allows clients to access their billing histories, detailed invoices, and payment records at any time, which helps demystify the billing process and facilitates open, honest communication.

Adapting to New Billing Systems

Challenge: Shifting to a new billing system introduces a period of adjustment and learning, which can be hard for some teams accustomed to traditional methods.

Solution: Choose a billing system that offers comprehensive training and support. PracticePanther provides a range of training options, from live webinars to on-demand tutorials, ensuring that your team is well-equipped to adopt the new system efficiently. New users also get a dedicated customer success agent who will ensure easy adoption of the software.

What Tasks Are Billable in a Law Firm?

As mentioned above, one of the more difficult things to grasp for those newer to the legal industry is what counts as a billable task. To assist with this process, here is a general overview of what you can bill clients for. Think of this as your attorney billing cheat sheet.

Common Billable Tasks

• Client Meetings: Time spent in meetings (in-person, on the phone, or via video conference) discussing case progress, strategies, or providing legal advice.
• Court Appearances: Time spent representing a client in court, including wait time and post-hearing discussions.
• Legal Research and Analysis: Hours spent researching case law, statutes, and other legal precedents relevant to a client’s case.
• Drafting Legal Documents: Writing contracts, briefs, wills, and other legal documents that are part of client services.
• Correspondence: Time spent writing emails, letters, or making phone calls related to a client’s matter.
• Reviewing Client Documentation: Analyzing documents provided by clients or third parties that relate to the case or matter.
• Preparing for Depositions: Time spent preparing oneself, the client, or witnesses for depositions.
• Attendance at Mediations or Arbitrations: Participating in alternative dispute resolution processes on behalf of a client.
• Transactional Work: Time spent on negotiations, due diligence, and closing of transactions.
• Enforcement of Judgments: Activities related to the collection or enforcement of judgments and orders.

Common Non-Billable Tasks

• General administrative tasks such as filing, photocopying, or organizing physical or digital files not directly related to client matters
• Internal meetings not related to specific client issues
• Training and professional development that is not client-specific
• Time spent correcting mistakes you’ve made in client work
• Marketing or business development activities
• Preparing invoices or billing activities
• Routine office management tasks
• Attending general networking events
• Compliance and regulatory learning not specific to a client’s case

It’s important to keep in mind that law firm billing guidelines will vary from firm to firm, so it’s best to confirm the firm’s practices before you start billing.

How Do You Make a Legal Bill?

Ideally, you should make a legal bill that helps maintain transparency, improve client trust, and ensure timely payments. While many may choose to create these manually using spreadsheets, this method wastes a significant amount of time on a task that usually happens monthly. 

Instead, read below to see how easy it is to make a legal bill using a practice management system like PracticePanther:

Step 1: Log Your Time and Expenses Accurately

The foundation of any legal bill is accurate time tracking. As you perform various tasks, from reviewing pleadings to court appearances, it’s crucial to log each activity as you go. 

With PracticePanther, you can use the integrated time tracking tool that allows you to start and stop timers as you switch between tasks, or you can enter your time manually. You can complete this on your desktop or the PracticePanther mobile app. Ensure that all associated expenses, such as court fees, travel costs, and others, are also recorded promptly within the same system.

Step 2: Review and Categorize Your Entries

Once you log your hours and expenses, the next step is to review each entry for accuracy and categorize them appropriately. In PracticePanther, you can assign each time entry to specific billing categories predefined in your settings. This categorization aids in creating a structured bill, making it easier for clients to understand what they are being charged for and why.

Step 3: Generate the Invoice

Using PracticePanther, you can quickly generate invoices from your logged time and expenses. PracticePanther allows you to customize the layout and details of your invoices, including adding a firm logo, client information, detailed descriptions of the services provided, and the corresponding charges. This customization helps enhance the professional appearance of your bills.

Step 4: Apply Discounts or Trust Account Funds

If you need to apply discounts or draw from a client’s trust account, PracticePanther facilitates these adjustments easily. You can apply discounts to specific items or the total bill and manage trust account deductions directly within the invoice, ensuring all financial transactions are transparent and compliant with legal standards.

Step 5: Review and Send the Invoice

Before sending the invoice to the client, do a final review to ensure all information is accurate and complete. PracticePanther offers features like previewing the invoice as it would appear to the client to accommodate this process. Once satisfied, you can email or text the invoice directly from the system or download it as a PDF and send it another way.

Alternatively, clients can view and pay their balance and invoices at any time via the PracticePanther client portal, eliminating calls to your firms to handle these simple issues.

Step 6: Follow Up and Manage Payments

After you send the invoice, PracticePanther helps you track which invoices have been paid and which are still outstanding. You can set up automated reminders for clients who have overdue payments, helping to reduce the time spent following up on unpaid bills.

Bonus Step: Get PracticePanther

Curious to see how seamless your billing process can be? It’s time to experience PracticePanther firsthand. Embark on a smoother practice management journey today by signing up for a free trial or scheduling a personalized demo. 

It’s time to leave the spreadsheet struggles behind. Your clients — and your peace of mind — will thank you.