Outside counsel billing guidelines: what to include
The six sections that make billing guidelines enforceable, with example language for each.
Outside counsel billing guidelines set out how your law firms may bill you: what they can charge, how time must be recorded, what expenses you will reimburse, and what happens when a bill does not comply. Good guidelines prevent most billing disputes before they start, because both sides know the rules.
The common failure is not missing guidelines but vague ones. “Staffing should be efficient” cannot be enforced; “partners may bill no more than 30% of hours on a matter without our approval” can. Here is what to cover, section by section, with example language you can adapt.
Rates and caps
What to cover
- A rate card by timekeeper or seniority band
- A blended-rate cap per matter, where you have one
- When increases may take effect and how much notice is required
Example language
Rates are fixed for the calendar year at those in Schedule A. Any increase requires 60 days’ written notice and our written approval, and will not exceed 3% a year.
Staffing
What to cover
- Named lead attorneys and approval for adding timekeepers
- Work delegated to the lowest appropriate level
- No billing for training new team members
Example language
Staffing beyond the approved team requires our consent. We will not pay for time spent bringing new timekeepers up to speed on the matter.
Time recording
What to cover
- The billing increment (commonly 0.1 hour)
- One task per entry: no block billing
- Narratives specific enough to show what was done and why
Example language
Time is recorded in increments of one-tenth of an hour. Each entry describes a single task. Entries such as “attention to file” or “review documents” will not be paid.
Expenses
What to cover
- Reimbursable items, at actual cost with receipts over a set amount
- Non-billable items: overhead, routine copying, meals, local travel
- Pre-approval for experts, vendors and travel
Example language
Expenses are reimbursed at actual cost without mark-up. Overhead, including research subscriptions and secretarial time, is not billable. Travel requires prior approval.
Invoice format
What to cover
- Matter number, period, and a line per timekeeper entry
- Timekeeper name, role, rate, hours and amount on each line
- Monthly invoicing, within a set number of days of month-end
Example language
Invoices are submitted monthly, within 30 days of month-end, and itemize each entry by date, timekeeper, role, rate, time and description.
Review and disputes
What to cover
- Your right to review, reduce or query any entry
- How the firm is notified, and the time it has to respond
- Who resolves a dispute, and that undisputed amounts are still paid
Example language
We may reduce or query any charge that does not meet these guidelines. We will pay undisputed amounts on time and notify you of the rest within 30 days.
Section 1 of 6: Rates and caps
1. Rates and caps
Attach a rate card listing each timekeeper or seniority band and the agreed rate. Say how long rates are fixed, how much notice the firm must give before an increase, and whether increases need your approval. If you have negotiated a blended-rate cap or a discount, state exactly how it is calculated and applied.
2. Staffing
Name the lead lawyers and require approval before others are added. Ask that work be done at the lowest appropriate level of seniority, and state that you will not pay for time spent training new team members or getting them up to speed after staffing changes.
3. Time recording
Set the billing increment, commonly one-tenth of an hour. Require one task per time entry, which rules out block billing, and descriptions specific enough to show what was done and why. List the kinds of entry you will not pay for: vague narratives, administrative tasks, and internal conferences beyond an agreed number of attendees.
4. Expenses
Say what may be passed through and on what terms: actual cost, no mark-up, receipts over a set amount. List what is overhead and therefore not billable, such as research subscriptions, secretarial time and routine copying, and which costs need approval in advance, such as experts, outside vendors and travel.
5. Invoice format
Specify what every invoice must show: the matter number and billing period, and for each entry the date, timekeeper, role, rate, time and description. Set the frequency, usually monthly, and a deadline after month-end. Consider refusing time billed long after the work was done, since late entries are the hardest to check.
6. Review and disputes
Reserve the right to review, reduce or query any charge that does not meet the guidelines. Set out how you will tell the firm, how long it has to respond, and who resolves a disagreement. Commit to paying undisputed amounts on time: it keeps relationships healthy and makes the rest of the guidelines easier to hold firms to.
Make them stick
Send the guidelines with every engagement letter and get written acceptance. Review them each year alongside rate negotiations. Most importantly, check every invoice against them: guidelines that are never enforced teach firms that they do not matter. Our step-by-step invoice review guide shows how to do that consistently.
Where QuarterHour fits
QuarterHour turns your guidelines into checks that run on every invoice: rates and caps, staffing mix, increments, expenses and narratives, firm by firm, using the terms in your own engagement letters and MSAs.