Lawyers billing clients on the basis of time spent is less than ideal for all involved. For lawyers, it isn’t the best proxy for value delivered in terms of service and incentivizes inefficiency. For clients, it isn’t the best proxy of value received in terms of service and leaves clients feeling like the only way to cut corners on costs is to either demand limited time on a task or to just not agree for a lawyer to perform a particular task. For clients and lawyers alike, it also creates distrust of lawyers with respect to second-guessing the amount of time they spend on tasks (or claim to have spend on tasks). It also doesn’t give clients much of a sense that they are paying for results or accomplishments. Lots of pieces have been written, over many, many years, about how the billable hour model is outdated or on its way out the door. Yet, it persists.
This is not going to be one of those pieces today. Rather, I want to write a few words about a case out of Wyoming that I would worry is going to send exactly the wrong message to lawyers. That case is a ruling on fee dispute litigation out of the Wyoming Supreme Court, Manigault v. Daly & Sorenson, LLC. You may have seen headlines of stories about it that are in the nature of: Court rules billing in 15-minute increments was not abusive.
All lawyers who bill by the hour end up having to pick some base line minimum increment for billing purposes. I, and my firm, do so using 6-minute increments (.1) as the baseline. It is certainly possible to measure time more accurately than that, but (I believe) that the standard minimum these days for keeping time is to carve time up into 6 minute blocks. There was a time when the standard minimum for those blocks were 15 minute intervals, but technology has advanced, timekeeping has improved, and the time when minimum quarter-of-an-hour billing was acceptable (in my opinion) has passed.
In the Wyoming decision, the Court ultimately found that this particular law firm’s use of a 15-minute minimum increment with this particular client was ultimately reasonable. Remarkably, it did so even when the firm did not have a written fee agreement with the client. But there are a couple of things about the case that – to me – stand out as crucial to the particular result and also help drive home the point that this is not something that most lawyers could get away with and, thus, should not attempt to do.
The first, and I think the more outcome-determinative, is that the fee dispute was one that was with a very long time client of the firm and, thus, someone who, over time, would be much less sympathetic to be heard complaining about 15-minute billing increments as the minimum. Since apparently that was how this client and that firm had interacted over the course of almost 100 prior matters over 15 years.
The second is that the record indicated that the firm was relatively diligent about aggregating tasks into the minimum increments so that the minimum increment was not used as a method of easily increasing the charge to the client.
The Wyoming Supreme Court explained quite cogently the difference between the situation it had before it this time and other, prior circumstances in which it took lawyers to task for how they used their 15-minute minimum billing increment approach:
Manigault likens the firm’s use of a fifteen-minute billing interval to that which was the subject of a disciplinary proceeding in Casper. In that case, the attorney employed a number of unethical billing practices and admittedly misused her fifteen-minute minimum billing interval. She billed fifteen minutes every time she signed a document, and several times she billed fifteen minutes for reviewing a one-page document. She also billed fifteen minutes to review a short document and then billed the same amount of time again for signing it.
In Casper, this Court discussed the practice of billing according to minimum intervals of six, ten, and fifteen minutes. . . . we observed it would be abusive to bill two fifteen minute charges for two five-minute phone calls in the same fifteen-minute period.
Nothing approaching that sort of unreasonable or abusive billing is evident on this record.. . .
What is not often discussed is this concept of the need to still attempt to hew toward composite accuracy in the amount of time billed regardless of what minimum increment is used. “Composite accuracy” might not be the right phrase but what I’m using it to attempt to describe is that the ultimate measure for a lawyer who bills by the hour has to be that you don’t use it to bill clients for more time in the day than the total time you actually spend working.
The truly pernicious problem for lawyers who attempt to still use 15-minute increments as their method of billing is how easily that can lead them to bill a collection of clients for 8 hours of time while only putting in 3 or 4 hours of actual work. Or, more likely, billing 14 or 15 hours for a day where 6 or 7 hours of actual time was spent performing work for clients.
The Wyoming case also, unfortunately, gave credence to a common attempted justification by lawyers confronted with trying to justify the 15-minute billing increment that – to me – involves a significant amount of disingenuity: that billing a client 15 minutes of time for a phone call that they know full well may have taken only 5 minutes is justified because the 15 minute time period also captures the time associated with stopping one task, shifting to the client’s task, making a note in the file about the interaction, and then trying to get back into the mindset of whatever you were working on before.
In modern practice, however, there is one dominant form of communication that simply – and often unequivocally – undercuts any lawyer that tries to use that justification. Email. Find me a lawyer who wants to justify a 15-minute minimum increment based on that kind of rationalization, and I strongly suspect that I can show that lawyer, by way of a review of their email history, that they turned much more quickly from answering an email for one client, to crafting an email for another client, then on to responding to some other email.
What that means is, if a lawyer is out there trying to charge their clients for 15 minutes of time for reading and responding to an email, which may have only taken them 5 minutes, and then attempting to justify it based on other things that were done or time lost as part of that, then it will often be extremely easy to demonstrate that within the same 15 minute period they will have replied or sent other emails to other clients on other matters and, likely, they will have billed that client for a 15 minute block as well. This quickly adds up and is how a lawyer could easily manage in only 20 minutes of actual working time to attempt to bill for an hour of work.
That fudging of the numbers, of course, can also happen using 6-minute increments of time, which raises the ultimate larger point that I fear escapes notice of far too many lawyers: no matter the minimum increment you pick (unless you are recording and billing for your time truly down to the minute), you are supposed to still be using that system as a proxy toward attempting to best capture your actual time spent.
That means that even if you are billing in 6-minute increments, you are supposed to be trying to bundle smaller tasks during the course of the day together into one of the minimum increments. If, for the same client, you respond to 2 and only 2 emails during the course of a day and each one took you only a couple of minutes to address, you are supposed to bill that client for one .1 time entry – because you spent a total of 4 minutes working for them that day and you have arranged to bill them at a minimum increment of 6 minutes. You are not supposed to bill .2 (12 minutes) for that 4 minutes of working time. When lawyers do both this and opt for the minimum 15 minute incremental block, then the problems with the arrangement increase in magnitude because the lawyer ends up billing the client for 30 minutes of time for 2 tasks that only took 4 minutes to perform.