When a client begins questioning your bills, is it the beginning of the end of the client relationship?

A lawyer recently told me, “If the client is questioning my bills, it means the client doesn’t trust me, and the relationship deteriorates from there. The relationship will end badly. It’s inevitable. It has nothing to do with me and there is nothing I can do about it.”

Is this really true?

Maybe, but then again, maybe not.

If a client is questioning a bill, it is not a foregone conclusion that the client doesn’t trust you; nor is it accurate to say that there is nothing that you can do about it.

Why do clients question lawyers’ bills?

There are many reasons why a client may question your bills. These might include:

• The client doesn’t understand what was done or why it was necessary
• The client doesn’t understand the process involved
• The client doesn’t understand your billing process
• The bill doesn’t fully describe the work performed or the effort expended on the client’s behalf
• The bill contains work that was not anticipated by the client
• The bill was much higher than the client expected

Many of these factors are within your control, and may be limited or eliminated with good billing and intake practices.

Good practices get bills paid

Use the initial client meeting to fully explain the scope of work to be performed and the fees associated with that work. Take advantage of this opportunity to fully explain all potential variables. Give the client the chance to ask questions. Many clients are reluctant to admit their ignorance of the law or the legal process and will be afraid to ask questions, but encouraging questions at the beginning can avoid headaches – and unpaid bills – later.

Avoid “surprise” bills that include unanticipated work or a higher fee than expected. No client likes to receive those kinds of bills. Communicate with the client about the work to be performed before undertaking that work. When unanticipated circumstances arise, get the client’s agreement on any new work before moving forward and explain why it must be performed and how it relates to the client’s goals and expectations. And use each bill as an opportunity to demonstrate and reinforce the value that you provide to the client.

Although there are rare occasions when it may not be possible to discuss work with the client before the work is done, the client’s first notification about unanticipated work or charges should not come when the client receives the bill. In all circumstances you should discuss the unanticipated events with the client and explain the effect on the fee before the bill is sent to the client. These conversations should take place by telephone or in person, and should not be communicated only by email in all but the most extreme circumstances.

What to do when a client questions your bill

When a client questions your bill, it is imperative that you investigate what is behind the client’s questions. What is motivating the inquiry?

There will always be some clients who will not value lawyers or the work they do, no matter how well you explain it. Others simply cannot afford your fees, and are just trying to get the bill as low as they can. But it is your responsibility to determine whether that is the case, or whether the client has legitimate questions about the work that was done and why or the amount of time expended.

When a client questions a bill, it is a good opportunity for you to reinforce value – to return the discussion you had with the client during the initial intake and to revisit the client’s goals and expectations for the engagement. If this conversation did not occur at intake, now is the time for you to explore these issues with the client to ensure that you and your client are working together toward a common goal.

Old clients, new matters

On occasion, billing questions arise when you are performing ongoing work for an existing client or the client requests new or additional work after completion of the matter for which you were originally engaged.

For example, assume a client hires you to negotiate a lease agreement at $250/hour. Once that contract has been negotiated and the lease has been signed, the client asks you to negotiate a contract with a vendor at the same $250/hour rate. Although you may have discussed the intricacies of negotiating a lease agreement with the client at the beginning of the engagement, the same may not be true for the second contract. If the vendor negotiation is more complicated or the other party is less responsive, the bill may be higher than the client expects, giving rise to questions when the client receives the bill.

Ideally, you would discuss the client’s objectives and expectations with each new item of work you undertake, and provide the client with the variables that might affect the fee, but many lawyers neglect this step with ongoing client relationships.

Hourly billing only complicates the matter, since it can be difficult to determine up front exactly how many hours will be expended on a client’s matter, particularly if the matter involves litigation or otherwise relies upon compliance or cooperation from other parties and/or their counsel. But variables and potential complications should be discussed with the client up front, and any delays or other complications should be communicated during the engagement as they occur, before the client is billed.

Billing write-offs

Another lawyer asks, “I have some clients for whom I write off a lot of time. Should I take that as a sign that I should eliminate the client? Should I itemize no-charge items on client bills? It’s time-consuming to keep track of these items, but later, the same client will question charges or skimp on necessary work to save money.”

First, explore the reasons why you are writing off time. Is it at the client’s request, or are you undercutting yourself by writing off legitimate time spent on the client’s matter before the client receives the bill? Are you writing off time because you believe the value of the services provided to the client is less than what you have billed? If so, you may need to examine the kinds of matters you are undertaking or how you are handling them.

If the client is asking for the write-off, have you adequately established the value of the work you have performed? Have you firmly established your billing practices and boundaries with the client?

While it is time-consuming, if you are going to bill based on hours, you should always keep track of all of the time you spend working for a client and always reflect it on the bill, even if (and perhaps especially if) you are not going to charge for that time. This may reduce or even eliminate instances of clients asking for a reduction for work that was necessary.

When you bill hourly, clients tend to focus on just hours, rather than on the actual work you are doing or the value you are providing to them and their business. It is especially important to show those kinds of clients that you are providing value and to show them that you are not nickel and diming them or charging them for every minute you’re working for them. It is likely that you are tracking this time to some extent anyway, so taking the few seconds it should take to create a no-charge billing entry is well worth it in client goodwill.

Keep in mind that the clients who are most focused on hours (to the exclusion of other factors) are usually not your ideal clients. You may want to use time write-offs or repeated billing questions as a way to help identify and eliminate lower value clients who are more demanding and do not value your services – but only after you’ve explored how you might salvage the relationship, set better billing practices and standards and communicate more effectively with clients about your services and your fees.

Update: This post was picked as a Technolawyer SmallLaw Pick of the Week!