Documenting Your Non-Billable Time
What records you should keep of your non-billable time.
There is a wide variety of non-billable time in every lawyer’s day. Some of your day is spent in purely administrative tasks, such as setting up files, reviewing and issuing bills, managing your staff, and taking care of your equipment needs. Other non-billable time includes cultivating potential clients and having initial intake conversations with new clients. At other times, you are participating in background educational programs, reading up on current cases and consulting with other attorneys on general issues. And, of course, there is simply unproductive time, whether pleasurable (checking Facebook or gossiping with friends over lunch) or unpleasant (dealing with credit card glitches or a new computer program). Depending on your efficiency and your staff setup, non-billable time can eat up a quarter or more of every day.
At the other end of the non-billable spectrum is work that is clearly client related, but still not necessarily billable. This can include background research on a topic that you probably should be up to date on already, but aren’t. It can also include time spent talking with experts or colleagues on tangential strategic concerns, or borderline tasks such as resolving conflicts of interest, discussing billing questions, or interviewing potential expert witnesses. And it will likely include time you spent mulling over the case (or rather, worrying about it) on your off-hours or as you fall to sleep.
Wholly apart from whether any of this time is billable, the question here is what records you should keep of your non-billable time. It’s not a simple yes-or-no question, and the answer hangs on how you consider the following concerns.
- Is there a chance that your client or court is going to challenge your fees later on, or be concerned about how much non-billable time you spent on a matter? If so, then if your work is even vaguely connected to a particular client or case, it’s worth keeping track of the time. Then, if your fees are challenged later on it will be very useful to be able to point to the many unbilled hours you spent on a matter. It will demonstrate that you weren’t greedy in your billing practices, and that you have a clear understanding of what is appropriate when it comes to billing a client. And, if anyone ever questions whether or not you took care of a certain task, you will have the record to show what you did. Thus, if a task is at all related to a specific case I don’t just record the time—I include it as non-billable time on the client’s bill.
- If some of your time is not billed because you feel that the fees are just too high for a particular matter, or because you realize you should have been able to get something done faster, it’s generally wiser to record the full amount of time and show the reduction of hours in your bill. Again, that way you have made it clear to the client that you aren’t ashamed of how much time something actually took, but you are acknowledging that you also realize that it might not be fair to bill them for the entire time spent. This might apply, for example, to time spent in court waiting for your case to be called, or a longer than usual intake session.
- If you are billing on a value or task basis, it’s always prudent to keep track of your time, in case your client ever challenges the size of your bill. It’s also useful for your own purposes, as you evaluate what’s a reasonable fixed fee rate to charge your clients. If drafting an agreement or trust document regularly takes three to five hours, you aren’t going to be financially successful if your fixed-fee rate is based upon two hours of time.
- Pro bono work may not be billable, but in most firms it is required that you keep track of that time. You never know, you might be awarded fees in a disputed court action, and you’ll need to have time records to substantiate your fee request. Moreover, your partners and boss will want to know how much time you are spending on the matter. So too if it’s a family or friend’s case. You will want to be clear in your own mind how much time something is taking, so you can be aware of how you are allocating your available work time each month.
- Even when matters are unquestionably non-billable, it is often helpful to keep track of that time, especially in your early years of practice. Clear record-keeping can have many valuable benefits. It can help you understand why you aren’t making as much money as you (or your spouse) think you should be generating. It also can come in handy as you evaluate whether to hire administrative staff or a legal assistant. It also is relevant when you ponder your long-term financial picture. One of the hardest questions every lawyer needs to ask is whether ramping up to a large number of clients with a heavy load of staff is better from a net income perspective, compared to a small book of business and a low staff overhead. You won’t be able to undertake that evaluation unless you have a realistic sense of how much time the administrative aspects of running your office really demand.
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.