The Lunacy of Hourly Billing
Over the past couple of weeks I had the opportunity to chat socially with an attorney and an accountant, at two different events. One knew me, the other did not. We wound up discussing hourly billing practices, and after a great deal of wine, here is a summary of what they told me about the practices of their firms which are enforced by senior partners.
• Never charge a “round hour.” Instead of charging for an hour, charge for 1.2 hours. No one will ever question two-tenths, and they add up considerably over the course of a year.
• If a client calls to question a bill or statement, that is billable time.
• If you are researching anything that can pertain to several clients, charge each client separately for the entire time. It is never to be pro-rated or apportioned.
• At any kind of social event, whether a planned lunch or a common political fund-raiser, ask some work-related questions and charge part of the time you were there to the client’s account. The client being charged need not even be present.
• If you take colleagues to lunch, discuss several clients, and charge the lunch and the time separately to each client.
• Bring a colleague into the discussions whenever possible to build additional hours.
• Even when work is done by lower level people, it should always be reviewed by you at your higher hourly rate.
I could go on, but you get the point. I’m not claiming that every professional services firm charging hourly rates is this unethical, but some are. It’s a shame that this kind of creativity couldn’t be invested in better service for the client or quicker results, but then, there wouldn’t be as many hours to bill. This is the lunacy of hourly billing.
Please feel free to make a comment reporting the abuses you’ve found or experienced. Here’s my favorite: When I was chair of the Newport International Film Festival, our bank mistakenly sent statements to an accounting firm with which we had no connection. The firm forwarded them to us, with an invoice for $125 representing the time it took to “handle, review, and take appropriate action” to get the papers to us.
I told them to sue us, and find a good attorney who charges by the hour.
© Alan Weiss 2011. All rights reserved.