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Billable Time?

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Steven B. Levy
Lexician
Special Guest Post

I’m often asked my opinion on whether time spent managing projects is billable.

My quick answer is, Billable time is what you and the client agree is billable.

That, of course, isn’t the most helpful answer, and I offer that answer with a smile.

Then I go into the specifics of working through this issue.

Obviously, this topic makes sense only in an hourly billing arrangement. (It’s yet another good reason for both clients and firms to consider alternatives to hourly billing.)

Consultant Tony Reiss posted an interesting quiz on billable time today, adapted from Robert Mowbray’s work (Taylor Mowbray LLP). You might want to take the quiz before continuing here.

You don’t have to agree with his suggested answers, by the way. (I think clients will disagree with half of them, but they are interesting and difficult questions open to numerous interpretations and, yes, negotiation with the client.)

I think this quiz sheds light on whether LPM time is billable. Perhaps the best way to approach the issue (beyond discussions with the client) is to look at two questions:

  1. How much of the less-than-organized time that you spend managing projects today do you bill?
  2. Should you bill the client for time spent reducing the overall bill (efficiency)?

Billing for Efficiency

Today, what is your firm’s policy on billing matter-related tasks that are not, strictly speaking, “lawyer work” such as preparing documents, research, offering advice, and so on? If you do not bill any of that time today, it’s unlikely you’ll bill for it using LPM. However, most firms do bill for significant amounts of this time. After all, it’s required in order to serve this particular client on this particular matter.

Consider treating project management the same way. Bill LPM tasks that address the client’s matter specifically, such as developing a project charter. You’re going to do the work required for a charter whether you prepare one overtly or not. You’ll ask the same questions, look for the same answers. The difference is that under LPM you’ll do so in a more organized, thoughtful, and efficient manner. You’ll be saving the client money compared to what you would have billed, because these tasks take less time. (It may not be obvious they take less time because you may be calling out tasks that previously you lumped into the great hard-to-define mush of billable six-minute increments, but that’s a different issue.)

Here’s another example: You give an assignment using the precepts I teach in my seminars and classes. It takes you ten minutes (times two people) to properly give the assignment. Billable? I think so. If you do it “the old way,” you might spend only five minutes (times two people), if that much. However, what about all the extra time you’ll spend during the course of the assignment offering clarification, looking for avoidable errors, doing work that wasn’t truly on point, and so on? That will add up to far more than the additional few minutes to give the assignment correctly. Even if you write off rather than bill work that missed the mark (which is a significant issue for the firm), your total billable time will generally be considerably more than if you had given the assignment optimally in the first place.

On the other hand, tasks or parts of tasks that relate to firm growth might not be billable. For example, the project debrief (a/k/a after-action review) at the conclusion of the matter relates to firm and professional growth rather than the specific matter. What you learn will benefit clients in the long run, but it won’t really affect the matter just completed. Thus it’s probably not billable. However, what you learn will make you more effective and efficient going forward, so there should be some line in the internal ledger against which you mark the time spent.

Do Clients Use Project Management?

It’s also worth considering whether the clients use PM in producing whatever it is they make. (Please don’t confuse what passes for PM in IT projects with PM in their engineering divisions. Clients whose only encounter with project management is the to-them incomprehensible and absurd demands of too many IT teams are not going to be favorably disposed toward hearing about your own project management. If IT has poisoned the well, you’ll have to work extra hard to find a clean water supply.)

Corporations with industrial processes are usually big on project management – pharmaceuticals, aerospace, manufacturing, etc. They get it, and are likely to be pleased that you get it too. They understand that paying a little for project management saves them a lot down the road. That’s not going to stop many of them from trying to negotiate it out of the bill – that’s their job as a customer (client), to get the best price possible relative to the quality of work they’re looking for. That doesn’t mean you need to take their negotiating stance at face value.

Bottom line – if you’re adding value to the client and for the client, you should be compensated for that work. Reasonable clients will consider that fair.

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Steven B. Levy, the author of Legal Project Management and The Off Switch, teaches classes and seminars to law firms, law departments, and government agencies around the world. Steven can be reaached at steven.levy@lusyx.com