A recent article in the Financial Times highlights the need for more transparency by professional firms when it comes to raising bills for services rendered.

NATIONAL NEWS: Law firms face greater scrutiny over charges

By Bob Sherwood, Legal Correspondent
Financial Times; Oct 29, 2002

Law firms are braced for calls from clients demanding fuller explanations of their bills in the wake of a leaked Clifford Chance staff memo that alleged potential overcharging.

Lawyers from top international firms admitted they expected clients would ask more questions about their bills - and admitted billing practices would probably have to change.

Leading firms in London insisted the so-called "padding" of hours, encouraged by the hard-nosed culture of forcing junior lawyers to reach an annual billing target, was largely a US problem. "I suspect a number of firms over there have been doing it for years," said a senior lawyer at one magic circle firm.

But privately firms say they expect greater scrutiny from clients. "It's bound to happen, especially in the current economic climate where companies are trying to keep their overheads as low as possible," said a partner at another firm.

The memo from Clifford Chance's New York associates to partners, published in the Financial Times on Saturday, complained of the firm's 2,420-hour billing requirement. The memo claimed such a high target encouraged the "padding" of hours to reach the target.

Ray Nolan, chief executive of Coretime, a consultancy that advises legal and accounting firms on managing timesheets and billing, believes the memo could prompt a sea-change in how clients pay their lawyers.

"I think this is going to affect law firms across the board. Customers are going to demand greater transparency in their bills," he said. "Customers are going to expect 10 pages of notes explaining the timesheets with every invoice. The days of issuing a large bill and expecting to get away with it are gone."

He also expressed horror at Clifford Chance's US billing target. "It's simply impossible. There are only 1,968 hours in an average working year." And that did not take into account non- chargeable work such as training, mentoring or pitching to prospective clients.

Law firms now expect more clients to demand a fixed price for a job, which puts the onus on the firms to complete work more quickly and use less expensive lawyers where they can.

Partners at some of the leading firms in London said clients were already becoming more sophisticated in their demands. Ford Motors was recently reported to have asked 20 firms to pitch for work in an attempt to cut its legal spending.

Some smaller firms have also started to give clients the ability to monitor the progress of their bills over the internet.

People close to one magic circle firm in London said there were moves to consider setting targets for non-chargeable work in addition to fee-earning work.

Back To Top