Research from the Legal Trends Report 2023 shows that lawyers’ 16% of billable law firm hours go unbilled. This loss is majorly due to avoidable billing errors.
However, the Thomson Reuters Law Firm Billing Efficiency and Write Downs Report shows that 14% of law firms first reduce their bill for fear of the client challenging it.
Billing increments are a key part of the practice of law. Attorneys use them to charge clients for the time they spend on their cases. They are pre-set units of time that attorneys use to track their work to bill clients fairly and consistently.
This ensures your clients are neither undercharged nor overcharged, improving their experience.
With the right tools, you can track the time worked and ensure accuracy in billing. In this article, we’ll discuss how billing increments can improve billing accuracy and revenue in your firm. Read on!
What Are Attorney Billing Increments?
Billing increments are the specific units of time attorneys use to measure and bill for their work. Instead of billing clients for every minute worked, attorneys round up the time spent on a task to the nearest increment.
It simplifies the billing process and provides a standard way of charging for legal services.
Understanding billing increments is important for both attorneys and clients because it explains how fees are calculated and helps manage expectations around costs. The purpose of billing increments is to simplify timekeeping and invoicing. By using increments, attorneys can:
- Be Accurate: Billing increments allow for exact time tracking and less chance of billing errors.
- Simplify Billing: Attorneys can group time into chunks instead of tracking every minute.
- Be Consistent: Standard increments keep billing practices consistent across cases and clients.
- Be Transparent: Clear increments explain to clients how they are being charged for legal services.
Why Accurate Billing Increments Matter
Accurate attorney billing increments help ensure fair pay, build client trust, and ensure proper financial management.
Ensuring Fair Compensation
Accurate billing increments are key to getting paid fairly. Lawyers work on complex cases that take a lot of time and effort, and accurate billing reflects the value of their work. By using exact increments, lawyers can:
- Capture All Work: Every task, whether it’s a quick phone call, a document draft, or research, is accounted for so no work goes unpaid.
- Show Expertise and Effort: Detailed billing allows lawyers to show how much time and expertise went into each task and why they get paid.
- Avoid Underbilling: Smaller increments like 6-minute intervals help prevent underbilling by capturing even the smallest tasks that add up over time to the overall work.
Accurate billing increments ensure that attorneys are paid fairly for their work, keep their practices financially viable, and recognize the value of their services.
Building Client Trust
Transparent billing is key to building trust with clients. When clients can see where their money is being spent, they are more likely to feel comfortable in the attorney-client relationship. Transparent billing:
- Better Communication: Detailed bills give clients a clear understanding of what was done and how long each task took so they can communicate about costs.
- Prevent Disputes: By showing a breakdown of time and tasks, transparent billing reduces the chance of fee disputes and builds a positive relationship.
- Show Professionalism: Clear and accurate billing shows the attorney is committed to professionalism and ethics and builds client confidence.
Clients who trust their lawyers are more likely to return for future work and refer others to the firm, which is good for both the client and the lawyer’s practice.
Improving Financial Management
Accurate billing is key to financial planning and management of law firms. It helps:
- Revenue Tracking: Exact billing ensures all work is accounted for, allowing you to see the firm’s revenue stream and where to improve.
- Budgeting and Forecasting: Detailed records of billable hours and tasks allow firms to create accurate budgets, financial forecast plans, and resources.
- Cash Flow: Consistent and exact billing means timely invoicing, payment collection, better cash flow, and financial stability.
- Performance Metrics: Billing data can be used to measure attorney performance and see where the firm is strong and where to improve.
Common Billing Increment Practices in Law Firms
Attorneys may use different billing increments depending on their practice area, firm policies or client agreements. Here are the most common types of billing increments:
6-Minute Increments
This is one of the most common billing increments used by attorneys. In this system, each increment represents six minutes of work. For example, if an attorney spends 12 minutes on a task, it would be billed as two increments. This provides a detailed time breakdown and more precise billing. However, it is also more time-consuming to track and record.
10-Minute Increments
In this system, each increment represents ten minutes of work. For example, 20 minutes of work would be billed as two increments. This system is easier to track and record than smaller increments, but it still provides some detail. However, it may cause overbilling or underbilling for shorter tasks.
15-Minute Increments
Each increment represents fifteen minutes of work. For example, 30 minutes of work would be billed as two increments. This system helps simplify timekeeping and billing and yields less administrative burden. However, it can lead to overbilling if tasks are often shorter than 15 minutes.
30-Minute Increments (0.5 Hours)
This system is typically less common in legal practice; each increment represents thirty minutes of work. It simplifies billing even more, with less administrative work. However, it can still cause significant overbilling for shorter tasks, which may lead to client dissatisfaction.
5. Custom Billing Increment
This gives you the ability to cater to both you and your client. This means the billing is as accurate and fair as possible, given the individual circumstances of each case and each client.
Clients have different needs and expectations when it comes to billing. Custom billing increments allow you to meet those needs. For example, some clients want smaller increments to see a more detailed breakdown of time spent on their case and know exactly what they’re paying for.
Others want larger increments to simplify their invoices and reduce the number of entries so it’s easier for them to review and manage their legal expenses.
Whether billing in 6-minute, 10-minute, 15-minute, or 30-minute increments, the key is to be transparent and consistent.
Tools and Software for Managing Billing Increments
Accurate billing is key to legal practice; using the right tools and software can make it more precise and efficient. Here are some top tools to help law firms bill in increments.
Clio
Clio is full practice management software with robust billing features that make attorney billing increments a breeze. Its interface lets attorneys track time in custom increments, capturing every billable minute.
Invoices show these increments so clients can see what they’re being charged for. Clio also integrates with other accounting tools, streamlining financial management for law firms.
Try Clio’s billing tools today and see how they can help your practice bill more accurately.
LawPay
LawPay is a payment solution for law firms that simplifies the billing process while meeting legal industry standards. One of the best features of LawPay is its ability to bill in increments.
LawPay integrates seamlessly with practice management software so attorneys can easily track and bill time in whatever increments they need.
It also has secure payment processing and trust accounting, so financial integrity in legal practice is maintained. Request a demo of LeanLaw to see how it bills and how it can help your firm.
LeanLaw
LeanLaw has a solution for billing in increments, specifically for small—to mid-sized law firms. The software has a flexible and easy-to-use interface to track billable time in whatever increments attorneys need to bill for.
LeanLaw integrates with QuickBooks Online, so it’s easy to manage finances and generate detailed invoices that show exactly what time was worked.
Its reporting features also allow firms to see how they bill and optimize their financials. Request a Demo to see how it works
Best Practices for Implementing Billing Increments
To make the most of your attorney billing increments, here are a few best practices:
Consistency in Billing
Consistency in billing is key to transparency and fairness in law. It means all clients are billed the same, which builds trust and avoids disputes.
Consistent billing means standardizing the increments across the firm; every attorney adheres to those standards. It simplifies the billing process and creates clear and understandable invoices for clients.
When clients see consistent billing, they trust the firm more.
Training Staff on Billing Practices
Training staff on billing practices is critical to accuracy and efficiency. All legal team members, including attorneys, paralegals, and administrative staff, should be knowledgeable about the firm’s billing policies and procedures.
Training should cover accurate time tracking, how to use billing software, and the firm’s billing increments. Investing in training programs can reduce errors and improve the billing process.
Regular Audits and Reviews
Regular audits and reviews of billing practices can improve accuracy and compliance. Audits help identify and correct errors, ensure billing policies are adhered to, and maintain high financial management standards.
Audits can include reviewing time entries, checking for consistency in billing increments, and ensuring all billable activities are recorded.
By auditing regularly, law firms can fine-tune their billing process, reduce discrepancies, and give clients accurate and transparent invoices.
Case Studies and Success Stories
Gehi Law & Associates, an immigration law firm, was having trouble with its billing practices. With a growing client base and more complex cases, it needed a solution to streamline its billing and get paid fairly for its work.
Effective billing increments with Immigration Speed transformed its billing.
Before Immigration Speed, Gehi Law & Associates had inconsistent billing. Attorneys were tracking time manually which led to errors and underbilling.
No standard billing increments created confusion for clients and extra work for staff. They knew they needed a more efficient and accurate billing system to increase client satisfaction and financial management.
The law firm used Immigration Speed, a legal billing software, to manage their complex billing needs. The software’s custom billing increments allowed them to create their own billing practices.
Immigration Speed allowed them to standardize billing increments across all cases. Automated time tracking, reduced errors, saved time and generated clear and concise invoices so clients could understand the charges and be transparent.
Immigration Speed transformed Gehi Law & Associates’ billing. Automated time tracking and standard increments eliminated errors, so every client was billed correctly.
The software streamlined administrative work so attorneys could focus more on client work and less on billing. Detailed and transparent invoices increased client trust and satisfaction as clients could see what they were being billed for.
Overall, Immigration Speed was key to their efficiency, accuracy, and client relations. Want to improve your firm’s billing efficiency? Take advantage of the free trial. Use Immigration Speed for free!
Conclusion
Billing increments are pre-set time blocks that lawyers use to track and bill for their time, 6 minutes or 10 minutes, etc. They are crucial for accurate and consistent billing which means fair compensation and client transparency.
Tools like Immigration Speed automate time tracking, standardize billing and generate detailed invoices. They speed up billing and improve efficiency, financial management and client trust through transparent billing.
Understanding and using billing increments improves billing accuracy and firm efficiency. Try Immigration Speed. Book a Demo today.
FAQs:
Here are some frequently asked questions.
1. What are attorney billing increments, and why are they important?
Attorney billing increments are pre-set time blocks (6 minutes or 10 minutes, etc.) used to track and bill for work.
They matter because they make the billing process standardized, so it’s accurate, transparent, and fair to charge clients for the work.
By using increments, law firms can provide detailed invoices that show the actual time spent on each task so you can justify the fees and trust your clients.
2. How do different billing increments affect a law firm’s revenue?
Different billing increments can impact a law firm’s income in several ways. Smaller increments (6 minutes) allow for more detailed time tracking and potentially more billable hours which can increase income.
But they also require more administrative work. Larger increments (15 minutes) simplify billing but may underestimate time spent on tasks which can impact revenue accuracy.
Choosing the right increment size depends on the firm’s billing policy, client expectations and efficiency goals.
3. What tools can help manage billing increments effectively?
Software tools like Clio, LawPay, and LeanLaw can help with billing increments. They automate time tracking, standardize billing across cases, and generate detailed invoices. Clio integrates with accounting software for financial management, LawPay complies with legal billing standards, and LeanLaw has solutions for small to mid-sized firms to increase efficiency and accuracy in billing.
4. What are the best practices for implementing billing increments in a law firm?
Be consistent, train your staff, and conduct regular audits. Standardize billing increments across the firm and ensure uniformity and transparency. Train staff on billing procedures, software, and time-tracking accuracy.
Finally, conduct regular audits to review billing practices, ensure compliance with policies, and identify areas for improvement.
5. How can accurate billing increments improve client relationships?
Accurate billing increments are key to client relationships, providing transparency and trust. Clear and detailed invoices based on accurate time tracking show professionalism and accountability. Clients want to know exactly what they are being billed for, which reduces disputes and increases satisfaction. Transparent billing builds credibility and long-term relationships, as clients feel the firm is fair and trustworthy.
