Law Office Management Chapter 6

What are the Timekeeping Ethics?

+ Do not bill clients for work not performed. + Do not pad time sheets. + Do not charge clients for time spent on personal matters. + Do not double-bill. + Do not bill multiple clients for one activity. + Do not apply an attorney's hourly rate to the services of a paralegal.

What are Noncreditable Nonbillable Hours?

+ Educational activities + Personal matters + Association work

What are Creditable Nonbillable Hours?

+ Serving on law firm committees + Pro bono work + Management functions + Administrative tasks + Training

Statutory Fees

- 7% of an estate up to $200,000 - 5% of the next $500,000 - 3% of the next $1,000,000 - 2% of funds in excess of $1,000,000

When would Corporate Legal Departments Use Time Records?

- Bill "clients" - Management reports - Justify additional staff and budget increases - Court-awarded legal fees

What are the Pros for Referral Fees?

- Clients referred to qualified lawyer - Compensates referring attorney for time spent

Timekeeping Tips

- Keep a time sheet handy - Record the largest amount of time - Document time as project is finished - Do NOT estimate time - Be accurate - Be descriptive and concise - Record all nonbillable time - Develop To-Do lists

What are the two Methods of Manual Systems?

- Long Method +Documents each activity as you start and stop it - Short Method (block billing) +One entry per case per day

When would Government Legal Offices use Time Records?

- Management reports - Provide statistics - Prepare budgets

What are the Cons for Referral Fees?

- May increase client's bill - Clients offended - Beneath dignity - Clients referred to lawyer who charges highest fee

What other charges and fees do law firms charge?

- Other office personnel - Hard costs - Soft costs

What are Soft Costs?

- Photocopies - Multiple-use documents - Faxes - Long-distance telephone calls - Use of conference rooms - Use of firm extranet - Postage - Supplies - Document storage - Outside services - Postage - Anything else

Contingency Law Firms Use Time Records to?

- Recover fees in fee disputes - Calculate the profitability of a case - Determine a case's settlement value - Calculate the amount of lien if terminated

COMMON TIMEKEEPING PROBLEMS: The Vanishing File ~ How does a paralegal document time spent looking for files? Should this time be creditable or noncreditable nonbillable hours?

- The time should not be billed to the client. - Paralegals should not be penalized. - Would be administrative hours.

What are the factors for considering flat fees?

- Time it takes to complete a case - Timekeeper's hourly rate

Additional Time Sheet Information?

-Department code -Task-based code numbers, if applicable -Type-of-case code number

Time Sheet Entries: Descriptive?

-Review answers to interrogatories -Conference w/attorney re. trial notebook -Telephone call to client re. deposition -Research fraud issues on breach of contract -Inserted discovery responses in discovery database

Time Sheet Entries: Not Descriptive?

-Review file -Conference w/attorney -Telephone call -Research -Worked on computer

Time Sheet Information

-Timekeeper's name -Date -File name -Client name or number -File number -Amount of time expended -Description of work -Name or initials of responsible attorney

The most commonly used minimum charge is?

0.2 hour, or 12 minutes -Some firms' minimum charge may be as much as 0.5 hour, or 30 minutes

Tenths of an Hour?

1. 1- 6 minutes 2. 7-12 minutes 3. 13 -18 minutes 4. 19 - 24 minutes 5. 25 - 30 minutes 6. 31- 36 minutes 7. 37- 42 minutes 8. 43 - 48 minutes 9. 49 - 54 minutes 10. 55 - 60 minutes

Modified Contingency Fee

1. Based on the difference between the amount at issue and the amount of final recovery 2. Used by defense firms Amount of potential liability: $500,000 Amount of recovery: $200,000 $300,000 Fee: 1/3 of savings: $100,000

Seven Purposes of Time Records?

1. Billing clients 2. Compensating hourly employees 3. Calculating employee productivity 4. Planning 5. Establishing fee structures 6. Monitoring work in progress 7. Forecasting income

Types of Hard Costs?

1. Filing Fees 2. Service Fees 3. Deposition Expenses 4. Online Legal Research

What are the three types of flat fees?

1. Per Diem 2. Minimum 3. Maximum

What are the 10 types of legal fees?

1. Retainer 2. Hourly 3. Flat 4. Task-Based 5. Contingency 6. Statutory 7. Referral 8. Premium 9. Value-Based 10. Combination

What are the four types of Fee Agreements?

1. Retainer Fee Agreements 2. Hourly Fee Agreements 3. Flat Fee Agreements 4. Contingency Fee Agreements

What are the common timekeeping problems?

1. The vanishing file 2. The chatty coworker 3. Time constraints 4. The waiting game 5. Travel time 6. Short telephone calls 7. Minimum charges

What are the four types of retainer fees?

1. True 2. Nonrefundable Chargeable 3. Nonrefundable Nonchargeable 4. Refundable Chargeable

Hard Cost

A cost incurred for filing fees, service fees, deposition expenses, and so on.

Soft Cost

A cost incurred for photocopying, long-distance telephone calls, faxes, and so on.

Contingency Fee

A fee consisting of a percentage of the possible recovery from a lawsuit.

Extraordinary Fee

A fee that is awarded in addition to statutory Fees and that compensates an attorney for extra work required by the circumstances of a case.

Value-based Fees

A fee that is based on the amount of value the case had fro the client.

Tort

A legal wrong done to a person; a civil wrong that is not based on a contract.

Charging Lien

A lien placed on a client's proceeds or judgment for payment of an attorney's fees.

Retaining Lien

A lien placed on property that belongs to a client and is in an attorney's possession.

Lodestar

A method of calculating an attorney's fee using the attorney's hourly rate multiplied by the number of hours worked on a case.

Premium Fees

A premium fee is a "tip" and may be: 1. Increased hourly rate 2. Additional contingency fee 3. Additional flat fee

Bait-and-Switch Tactics

A tactic used in advertising to attract customers to a sale item and then switch that item with one that is not on sale.

Multiplier

An amount that is added to an attorney's lodestar fee to compensate for time limitations and risks.

Determining Flat Fees?

Attorney's time 1 hr. @ $200 Paralegal's time 3 hrs. @ $100 = $300 $200 + $300 = $500 The flat fee should be $500

COMMON TIMEKEEPING PROBLEMS: The Chatty Co-Worker ~ How does a paralegal handle this situation?

Be both polite and assertive. "Gee, I would love to hear all about this, but I must prepare this document by noon. Can we talk at lunch?" Or discourage a chatty coworker by subtle tactics such as closing the office door.

Blended Hourly Rates

Blended hourly rates are an average of each timekeeper's hourly rate: - Attorney $300 per hr - Associate $200 per hr - Paralegal $100 per hr - Total $600 ___________________________________________________ $600 / 3 = $200 per hr

Work Description Codes?

C/W Conference with CT Court trial CH Court hearing D1 Draft pleadings D2 Draft  correspondence D3 Draft memorandum D4 Draft other DP Deposition N/C Nonchargeable P Preparation of R Research R1 Review pleadings R2 Review  correspondence R3 Review memorandum R4 Review other RV Revision of TC Telephone conference

COMMON TIMEKEEPING PROBLEMS: Minimum Charges ~ The time it takes for a paralegal to take the call and retrieve the document to give it to the secretary for copying is three minutes. Should the paralegal bill the client for the minimum charge, or not document the charge?

Document the call. One solution is to document the charge as a minimum charge and attach a note to the supervising attorney that the attorney took about three minutes. It is the supervising attorney's or management's responsibility to make the ultimate decision to charge or not charge the client.

Costs

Expenses of one side of a lawsuit that a judge orders the other side to reimburse; includes filing fees, service fees, and recording fees.

The knowledge and experience of a firm's timekeepers are a __________ ________________?

Firm's Products

Lawyer Hopping

Going from lawyer to lawyer for advice and representation.

Value Based Fees

If judgment is > $1.5 mil. 20% If judgment is $1 mil - $1.499 mil. 25% If judgment is < $ 1 mil. 33% Instead of a percentage, a value-based fee could also be a dollar figure.

per diem

Latin term meaning "by the day."

Minimum Charge

Most law firms have a minimum-charge policy.

COMMON TIMEKEEPING PROBLEMS: Travel Time ~ If the firm bills a client for travel time, may the timekeeper work on another client's case while traveling?

No. If the timekeeper did so, he or she would be guilty of double billing.

Portal-to-Portal

Of, or relating to, the time spent traveling from one place to another.

Flat Fee

One fee that is charged for an entire case; also known as a fixed fee.

How to determine Hourly Rates?

Salary + Overhead + Profit / Billable Hours = Hourly Rate $175,000 (Salary) + $87,500 (Overhead) + $48,750 (Profit) = $311,250 $311,250 / 1,500 (Billable Hours) = $208 per hour

Billable Hour

Sixty minutes of time that are billed to a client.

Reasonable Attorneys' Fees

The amount of attorneys' fees determined by a governing entity to be reasonable.

COMMON TIMEKEEPING PROBLEMS: Time Constraints ~ If a paralegal exceeds the allotted time for a project, how should he or she document the extra time?

The exact time spent on the matter should be included on the time sheet regardless of time constrictions.

Ceiling

The maximum number of hours that may be spent on nonbillable projects.

Ceiling

The maximum number of hours that my be spent on nonbillable projects.

Annual Billable Hours Requirement

The number of hours a timekeeper is required to bill in a year.

COMMON TIMEKEEPING PROBLEMS: Short Telephone Calls ~ Are the calls billed at minimum charge separately, or are they aggregated?

The paralegal must use her or his own judgement in this situation. The general rule is that if the calls occur while the paralegal is working on the case. If calls occur while the paralegal is working on another case, the calls should be billed at the minimum charge. The answer depends on the firm's policy, the type of client, and the circumstances involved.

Creditable Nonbillable Hours

The time that is applied to an annual billable hours requirement.

Noncreditable Nonbillable Hours

The time that is not applied to an annual billable hours requirement.

Noncreditable nonbillable Hours

The time that is not applied to an annual billable hours requirement.

COMMON TIMEKEEPING PROBLEMS: The Waiting Game ~ How should time be documented if your in a meeting with a client with your supervising attorney and your attorney needs to pick up calls and you need to document the hours, how would you document the time?

The time the paralegal waits for the attorney to resume the meeting should not be charged to the client unless the timekeeper works on the case while waiting.

Actual Cost

The true cost without consideration of a mark-up for profit.

Mark Up

To add a percentage on the cost of an item for profit.

Pad

To expand in a fraudulent manner.

Advance

To pay money before it is due; to loan money.

Hours Are Placed in 2 Categories, what are the two categories?

____ Billable hours +Directly applied to clients'matters +75% to 85% of the day ____ Nonbillable hours +Not applied to clients'matters. +2 types exist: creditable and noncreditable

What are the types of Liens?

____ Charging Lien—Placed on a judgment. ____ Retaining Lien—Placed on client's papers, money, or other property. ____ Other Lien—Promissory note secured by a deed on the client's real property.

What are the advantages to Task-Based Fees?

____ Fee is based on the complexity of each phase of a case. ____ Will allow more detailed bills and reports. ____ Clients can easily budget their legal expenses. ____ Encourages delegation and efficiency.

Lodestar and Multipliers?

____ Lodestar is based on the amount of hours reasonably spent and applying the attorney's hourly rate thereto. ____ Multiplier is an added amount that compensates the attorney for risk factors.

What are the Paralegal Ethics?

____ Paralegals may not set fees. ____ Paralegals should not quote fees. ____ Attorneys cannot share fees with paralegals.

What are the disadvantages to Task-Based Fees?

____ Requires a sophisticated accounting system to track profitability. ____ Requires detailed bills. ____ Must adhere to strict time constraints. ____ Requires monitoring by management.

What are the four Contingency Fee considerations (RISC)?

____ Risk ____ Inflation ____ Significant Expense ____ Cash Flow

Billable Hour versus Actual Hour?

____An actual hour contains 60 minutes. ____A billable hour may contain as little as 5 minutes or as much as 8 hours.

What are the Reasonable Fee Factors (TOCATPET)?

____Time and Labor Required ____Other Employment Opportunities ____Customary Fees ____Amount Involved and Results Obtained ____Time Limitations ____Professional Relationship with Client ____Experience, Reputation, and Ability of the ____Lawyers ____Type of Fee