Tracking internal lawyer time and charging clients: pros and cons

A fair number of larger law departments have their lawyers track time; some estimates place that number in the 20-30 percent range. Many of those departments, however, use the hours-worked information only for internal purposes such as to manage workloads, understand the kinds of matters they handle, and evaluate performance.

The other departments that track internal lawyer time charge that time back to clients (See my post of April 27, 2005 about Eastman Kodak’s European lawyer group.). A chargeback system has drawbacks; it’s a hassle for the lawyers, it requires someone to handle the “billing,” it might dissuade a needy but impecunious client from getting legal advice, and it’s just an intra-company transfer.

Defenders of charging time to clients have their arguments: it gives some market discipline to what otherwise is a free, and possibly abused, service; it adds another overseer of lawyer productivity – the client charged; it allows a law department to negotiate levels of service; and it gives punch to a plea to hire more lawyers.

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