Task based billing - overcoming fear.

• Author: Payton, Harry A.

Task based billing introduces a new element into the attorney-client relationship. Its impact on law firm economics and client relationships is significant. Its best use is in the positive sense of planning, organizing, and monitoring performance against projections. Its use should be instructive and constructive. Task based billing is a powerful and creative tool. Additionally, it is an audit tool. However, to use it purely as an audit tool is to limit its value.

Task based billing is a system for billing and budgeting the time and services of lawyers and other timekeepers. It divides litigation into phases and defines those phases by tasks. A uniform system was recently adopted through initiatives of the Uniform Task Based Budgeting and Billing Subcommittee of the Section of Litigation of the ABA, the American Corporate Counsel Association, and Price Waterhouse LLP. (For a copy of the system, call ABA Member Services at 312/988-5522 and ask for Product Code 5310129. A fee for copying and shipping will be charged.)

The initiatives grew out of the desire of law firms and corporate clients to unify the method of recordkeeping, budgeting, and billing lawyers' time to achieve better analysis and cost control. National and multinational clients frequently insist that their outside law firms use their respective billing systems. Many law firms were, and still are, required to employ multiple timekeeping and billing systems. The number of systems in use is limited only by the number of clients that insist on the use of their own proprietary system.

The uniform task based system permits standardization. It is designed for use in the mass of litigation that exists today. The system is not a panacea for all litigation. Some clients and law firms may find it less than adequate in certain suits. The system is not designed around litigation of a particular complexity or value, yet it allows sufficient flexibility for adaptation even in the "bet the company" litigation. Likewise, it allows clients engaging in "commodity" type litigation to modify the system to suit their particular informational and reporting needs.

Task based billing and budgeting is similar to the system of financial statement reporting used by accountants. The objective is to provide information in an understandable and meaningful format that fairly presents the work performed for the client during a given period. The tasks or particular activities are the equivalent of a chart of accounts. The five phases are equivalent to the classification of assets, liabilities, or equity, with a different import.

A unique feature of task based billing is that it allows finite and discrete analysis by task and phase. For example, the billing report for the discovery phase for a period will provide detail for each of the six tasks in the discovery phase. A separate report is made of all activities within each task. Services may be reported chronologically by timekeeper and the time and value of services for all timekeepers compiled for each task. Thereby, a "blended rate" can be determined. The blended rate is the total value of all time of all timekeepers divided by the total number of hours of service of all timekeepers.

Each phase may be reported in the same manner. Consequently, each billing report will take the reviewer from the daily detail that is the equivalent of a bookkeeping...