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The In-House Insider

Posts tagged block billing
The 8-Hour Workday

The Law of Diminishing Returns states that if one input in the production of a commodity is increased while all other inputs are fixed, a point will eventually be reached where additions to the input begin to yield smaller returns.  In other words, throwing bodies at a problem doesn’t necessarily increase output and may decrease output.  This law can be applied when attempting to squeeze in more hours to the standard work day.

Corporate law departments are increasingly scrutinizing the amount of time outside counsel bills for tasks and looking for inefficiencies.  Law firms are also analyzing time billed out to ensure they work within client billing guidelines and address any potential issues of fraudulent billing before they reach the client.

Legal Decoder’s Compliance Engine flags timekeepers who bill more than 8 hours per day (aka Hourly Max flag).  The reason behind the Hourly Max flag is a timekeeper’s efficiency level decreases when working in excess of 8 hours per day.  The way this rule works is the Compliance Engine flags all line items that have exceeded a total of 8 hours in a day.  For example, John Smith’s daily time entry for work completed is as follows:
 

 
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We analyzed customer data for patterns and trends on all instances where line items were flagged as Hourly Max.  First, we wanted to look to see if there was a trend in how time reporting occurred.  Based on the data the largest spikes and dips occurred in the middle of the month and just a few days before the end of the month.

 
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Next, we wanted to see if there was a correlation between word count and hours recorded.  Below is a graph of all line item narratives flagged as Hourly Max.  The trend is the longer the word counts the more time is recorded.  Two reasons are the work being recorded is more complex, thus, takes more time and Block Billing.   Block billing should be avoided as it combines many work tasks into one entry but makes it difficult to discern if bill padding (fraudulent billing) is taking place.

 
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Within the data, 8.5% of narratives contain 5 words or less with many of the entries being vague descriptions (e.g. “Reviewed same”, “Teleconference with client”).  The longest line item narrative contained over 650 words.  There were several instances of Hourly Max exceeding 24 hours of work in a single business day. 

You may be asking “Why would I care that a lawyer is working more than 8 hours a day?  That’s what I pay them for.”  Lawyers are humans and humans are not machines.  After a certain amount of time of working, concentration and energy levels decrease.  Being realistic, many people do work more than 8 hours a day on billable and non-billable work while producing quality work products.  Some of our clients are fine with their outside counsel billing more than 8 hours a day especially if it is in preparation of a trial or some other important event.  Yet, for many, “powering through” can result in error-prone work products and remediation of those work products which could lead to inflated costs and decreased effectiveness.

Block Billing Challenge

The issue of block billing is something law firms and clients have to deal with regularly.  Clients are frustrated when deciphering a blocked bill narrative and have imposed billing guidelines to counteract the challenge.  Law firms need a means by which to unbundle a block bill narrative to gain insights for pricing and legal process management purposes.  Some of our clients have run into block bill narratives on the extreme side and bordering on the unethical.  It's a real challenge for both sides.

We've encountered instances of block billing where the narratives are paragraphs long with hundreds or even thousands of words long.  Our technology has identified block bills where 24+ hours have been charged to a single block billed line item.

The California Bar Association explains block billing as:

"Block billing is the practice of assigning one time charge to multiple separate tasks. An
extreme example would be a fee bill mailed to a client at the end of the case with a single entry for 200 hours for “work on case” without identifying, among other things, the various individual tasks performed, who performed them, and when. A more subtle example would be a 3.6 hour charge for 'review client’s e-mail, retrieve file, call with DR re same, and prepare/send reply.'"
  

Recently, we made some improvements to the core technology (Legal Spend Analyzer) where block narratives are intelligently parsed out from paragraphs into separate line items.  For example, if the narrative below is identified as a block bill then each sentence can be parsed out for further analysis:

"Spoke with client about updated documents.  Draft, review, and exchange emails to colleagues about documentation.  Research motion.  Update J. Smith on patent reports regarding same."

After the system identifies it as a block bill it reads the narrative as 4 separate line items and analyzes each on its own:

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In one instance, our technology parsed a 2000 character blocked billed invoice into 28 separate line item parts   Ending the issue of block billing requires a change in habits and culture.  Until then, we will be continually working to improve our products to help our clients and law firms deal with these issues.

LEGAL SPEND COMPLIANCE PART 1

Being able to understand your data is key to moving forward in a changing legal industry.  Corporate law departments want to know how analytics can be used to help with decision-making and finding value.  Law firms and bill examiners want a solution to ensure billing compliance and get paid faster.  Finding a place to start and make sense of it all can be a challenge by itself.   

Not to worry.  For those who aren’t familiar with Legal Decoder's Legal Spend Analysis technology we have put together a 2-part primer to help take the first step in understanding your data.  Legal Decoder’s Compliance Engine analyzes line items on billing hygiene, workflow efficiency, and staffing.  This post will discuss Billing Hygiene.  The next post will cover Workflow Efficiency and Staffing

Block Billing

Good Billing Hygiene isn’t just inputting time and a short (or very long) description of the work done.  It means line item narratives are descriptive yet succinct to maintain good Billing Hygiene.  One of the most common issues we see is Block Billing.  Here’s an example of Block Billing:

“Review and final comments to plan; disclosure statement and final revisions to approval motion and instructions regarding filing and service; numerous conversations with co-counsel regarding solicitation issues.”

Here is another example of Block Billing:

“Review, analyze case law re confirmation issues (2.3); review, revise summary of same (.4); draft analysis of same (.4); correspond with R. Miller, C. Person, R. Smits, re same (.4); review, analyze precedent re same (.4); review, analyze confirmation timeline issues (.1); review, revise pleading re same (.2); correspond with F. Gore, A. Luck, C. Pagano, re issues re same (.3); correspond and conference with R. Mathis re same (.2); correspond and conference with P. George, J. Teague, M. Turner, N. McMillan, Company re ERISA meetings (.3); review and analyze issues re same (.4); conferences with T. Hilton re plan issues (.3).”

It’s easy to see what makes up Block Billing.  Too many narratives combined into one narrative.  Each mini-narrative doesn’t fully describe the work or the context of the work.  As with the second example, there are 10 narratives crammed into one narrative which makes it difficult to understand the work done.

Here is an example of a well-written narrative:

“Review and analysis of discovery requests directed at debtors regarding events leading to the Ch. 11 and post-petition operation of the debtors.”

The description of the work is succinct and, on its own, the context of the work can be traced to the matter.  Well-written narratives provide a complete picture of the work that has been done for the client and allows firms to track/manage matters appropriately.

Vague Entries

Another common Billing Hygiene issue we see are Vague Entries and they are exactly what they sound like: Entries with vague descriptions of work.

Here are some examples of Vague Entries:

“Further email updates”

“Emails re same”

Vague Entries don’t provide description or traceability to the work.  A few Vague Entries might be acceptable but when it is habitual it becomes a problem for the timekeeper, law firm, and client.  The client doesn’t know what work has been completed and what it is paying for.  The law firm doesn’t have the ability to map the work performed to the matter.  And it looks bad for the firm and the client because neither party can justify the work that was done.

Communication Inspecificity

Lastly, we see a lot of issues regarding Communication Inspecificity which just means the timekeeper didn’t properly identify the party he/she was in communication with.  Here’s an example of Communication Inspecificity:

“Participate in committee conference call.”

Not only does the timekeeper not specify who she/he was in communication with but the entry is also vague.  A better narrative could’ve been “Participated in committee conference call regarding SmithCo appeal with General Counsel.”

The ability to analyze, quantify, and collect valuable information from your legal spend data can unlock untapped value.  New insights can lead to better decisions and strategies.  Both the client and firm can better manage work-related matters, budgets, and costs using information drawn from data.  The legal industry is moving towards a data-driven model where surfacing information from data is the difference between adapting to the changing times or staying the same and watching the competition move forward.

For part 2 of this primer click here