Questions about fees often come up early in a Florida divorce or child custody case. Contributing writer Sara Turner explains how hourly billing works and what it means for you as a client.
When hiring legal counsel, one of the most intimidating parts may be the financial investment. Many people have heard that lawyers work on the “billable hour,” but do not understand how that system impacts them. Some potential clients may assume that the billable hour is an unfair practice, wherein the attorney is overcharging them, or billing for every small communication between them. In reality, the billable hour has an intentional purpose that ultimately serves both the client and the attorney helping them.
What is a billable hour?
The billable hour is a concept some law firms and attorneys use to catalog and charge for their time. It divides a lawyer’s workload into billable hours, non-billable hours, and actual hours worked. These categories are differentiated by the nature of the work, mainly drawing a distinction between internal and administrative work or work that provides output for the client.
- Billable Hours: drafting legal briefs, court pleadings, legal research, trial prep, negotiations, client meetings, etc.
- Non-Billable Hours: pro bono work, time sheets, business development work, etc. These are usually internal tasks that do not directly involve a client.
- Actual Hours: billable hours + non-billable hours
How that translates to a client’s cost is rather similar to other billing structures. It is simply: the hourly rate x hours worked = total charge
The only difference is what defines “hourly.” Most billable hour structures follow the concept of 1/10 of an hour, which equates to 6 minutes of work amounting to 0.1 of an hour. To illustrate, a 6-minute client phone call would be billed at 0.1 hours, whereas a 30-minute meeting is billed as 0.5 hours. As stated by a report from Yale Law School, billable hour targets range nationwide, but the average tends to fall between 1,700 and 2,300 billable hours per year.
Why bill this way?
The 6-minute standard allows lawyers to round up their work to the nearest increment, without over or undercharging for their services. CosmoLex summarizes this well by stating that the billable hour is “granular enough to capture short activities accurately, it is coarse enough to avoid the administrative burden of billing to the minute, and it is defensible to clients who review their invoices.”
The billable hour is also designed for revenue purposes of a firm. Attorneys track their time contemporaneously, meaning they document at the time the activity occurs, rather than summarizing the work at the end of the day or even the end of the work week. When not billing in small 6-minute increments, the pockets of work spent here and there can be absorbed in the overall summary, leading to an underestimation of work done. The 6-minute increment allows the small tasks that add up over time to be appropriately included with a precision that prevents overcharging.
How am I protected as a client?
While it may seem like the billable hour is designed for lawyers to maximize their earnings or for the purposes of a law firm’s revenue, the design of the system actually works both ways and is equally as protective for the client. The billable hour allows clients to see exactly what they are being charged for, which promotes transparency in the process.
It is important to remember that attorneys are bound to a high standard of ethics as outlined by the American Bar Association. As stated in the ABA formal opinion on billing, “the lawyer who has agreed to bill on the basis of hours expended does not fulfill her ethical duty if she bills the client for more time than she has actually expended on the client’s behalf.”
Rule 1.5 of the ABA Model Rules of Professional Conduct writes out, in detail, the rules for billing legal services and expressly prohibits “clearly excessive fees and costs.” This framework is evaluated through eight reasonableness standards, including things like the time and labor required for a task, what the customary fee may be in the area for that service, as well as experience, reputation, and ability of the lawyer performing their work.
Further, a client is entitled to full disclosure on behalf of their attorney for the basis in which they are being billed. This includes being informed on any changes in their rate that may occur during the duration of the client’s matter, based on Rule 1.5(b).
How is my rate determined?
Hourly rates for lawyers are determined on a circumstantial basis that considers factors like the geographic area, the attorney’s practice area, as well as their level of experience.
The 2022 Florida Bar Economics and Law Office Management Survey found 85 percent of respondents list their hourly rate at being over $275, while 54% report their hourly rate at being over $350.
How to plan for and anticipate legal fees
The legal process can be unpredictable, but there are still ways to predict an estimation of how much the process will cost you.
Tip: Request a phased budget and litigation roadmap that includes estimated hours of each phase (pleadings and intake, discovery, motions and mediation, and trial prep and trial). Your attorney can provide an educated estimate on ranges for these phases and apply their billable rate to this. Although this is not entirely predictive, it can be helpful to gauge a range of expected costs incurred for financial planning and preparation.
How does AI impact this?
As with much of AI, the future impact on industries is currently only analyzed in a predictive manner as AI advances and practices change.
The Clio Legal Trends Report provides great insights into changes already occurring. Namely, AI has the ability to promote administrative efficiency, by “greatly reduc[ing] the time that law firms spend on non-billable administrative tasks, allowing them to focus more on their clients and their revenue-generating work.”
Clio also notes that “firms continue to bill predominantly by the hour,” but that “as AI becomes more prominent in legal, firms will need to reconsider their use of the billable hour.”
But for now, the billable hour is a standard system used widely in the legal industry. Although it may seem attorney centered upon first glance, the billable hour framework adopts safeguards that also promote the client’s best interest.
Questions about what your case may cost?
Whether you are facing a contested divorce, an uncontested divorce, or a spousal support question, we can walk you through how fees work before you commit to anything. Call for a free, confidential phone consultation to talk through your situation and understand your options.