Law firm cutting my billed hours and "bonus" -- legal???

[Anonymous]

I started working for a new firm.

They have an unusual pay structure.

The pay is $10k per month. Then an additional $10k if you make your 150 hours in the month. Then an additional $300/hour for every hour above 150 hours.

The hours are "billable hours" which the firm defines as hours that can be billed.

After my first month, my boss cut 20 hours and told me that they "can't" be billed. I'm a very senior level attorney and only went to this firm for the salary.

As a result, I lost $6000.

If I hadn't worked so many hours overtime, I would have lost my $10k "bonus".

My boss says that it's a "bonus," not salary, and cannot be expected so it's not illegal not to pay it.

I am a patent litigator so I'm not an employment law expert but I consulted with an employment law expert and they agreed with my boss. They said that it's under "contract law" and since the definition of "billable hours" is disputed, my boss could be right and a lawsuit could just be a waste of time and money.

Obviously I'm now looking for a new job *****after only a month and please don't tell me how bad this looks****** but I don't even know my rights.

Meanwhile can someone just tell me how common this is??? I've never heard of "billable hours" being hours the FIRM bills.

[Anonymous]

Probably something you should cleared up. If you don’t want to leave, you could ask your boss what kind of hours are cut and how you could avoid that in the future, or for a written definition of billable hours. Also, are you sure that the firm actually wrote off those 20 hours and did not collect payables for the hours you worked? If they did, that seems way more messed up.

[Anonymous]

I wouldn’t go nuclear over your first month. It takes a little time to figure out each firm’s billing structure. If you are still having this problem after 4 months, it might not be a good fit for you.

I usually have to write off a lot of « billable » hours for my new associates, even the senior ones. If something normally takes 5 hours and the client is used to paying for 5 hours, I can’t bill the client for 20 hours just because it took a new associate that long. I just have to eat that cost myself at my firm. Your firm makes you eat that cost. I don’t really mind if it only takes a few months for the associate to get up to speed. It starts to bother me when I have to continuously eat those hours out of my own numbers. Your firm seems to have realized that associates don’t care when they tank a partner’s numbers if they keep getting paid and they have no incentive to work faster or more efficiently. You have an incentive to get faster because it will increase your pay.

[Anonymous]

Bonuses are always based on hours the firm can bill, not on what an attorney puts on a timesheet. And sometimes bonuses are based on the hours a firm is paid. If a client disputes your hours and the firm agrees to cut them, that can reduce your bonus as well.

This really is the norm. I have never heard of anything different with firms that pay based on billable hours. The name says it all - billable, not hours worked or recorded on the timesheet.

[Anonymous]

I find it a little surprising that a senior attorney would not understand the difference between time billed to client matters, for which the firm will be paid, and time billed to internal activities or pro-bono, for which the firm no only won't be paid but often cost money.

There are some gray area activities around business development and attorney development that you could argue will make the firm money in the long run, but which are an expense in the short run, but firms tend to be stingy about how these are allocated regarding billable hour requirements.

But even when a firm allows such activities to contribute to a billable hours requirement for purposes of bonus structure, they generally cap them. While your firm has a somewhat unusual system for billable requirements, it's very common for firms to set out billable targets for associates for them to qualify for certain bonuses, and there is no firm out there that would allow an associate to count hours billed to internal firm matters, as opposed to actual client work the firm can charge for, as a significant portion of that billing target.

Again, it is really surprising to me that you would not know this... I'm guessing you have spent most of your career in government service or an in-house position? This is very standard for law firms and even if you find a job elsewhere that does an annual billing target instead of a monthly one, you will not find a firm that doesn't make this distinction with its billables and tie it to bonus structure. It would be irresponsible for them to do otherwise because it can seriously hurt firm profitability if you don't incentivize attorneys to focus on client billings.

[Anonymous]

Anonymous wrote:I find it a little surprising that a senior attorney would not understand the difference between time billed to client matters, for which the firm will be paid, and time billed to internal activities or pro-bono, for which the firm no only won't be paid but often cost money.

There are some gray area activities around business development and attorney development that you could argue will make the firm money in the long run, but which are an expense in the short run, but firms tend to be stingy about how these are allocated regarding billable hour requirements.

But even when a firm allows such activities to contribute to a billable hours requirement for purposes of bonus structure, they generally cap them. While your firm has a somewhat unusual system for billable requirements, it's very common for firms to set out billable targets for associates for them to qualify for certain bonuses, and there is no firm out there that would allow an associate to count hours billed to internal firm matters, as opposed to actual client work the firm can charge for, as a significant portion of that billing target.

Again, it is really surprising to me that you would not know this... I'm guessing you have spent most of your career in government service or an in-house position? This is very standard for law firms and even if you find a job elsewhere that does an annual billing target instead of a monthly one, you will not find a firm that doesn't make this distinction with its billables and tie it to bonus structure. It would be irresponsible for them to do otherwise because it can seriously hurt firm profitability if you don't incentivize attorneys to focus on client billings.

I read this more as OP was billing client matters, but the numbers where cut. Like PP said, a client isn't paying 4 times the hours for a new associate to get up to speed. I doubt this is a case of pro bono or firm committee work not getting paid.

[Anonymous]

NONE of my hours are pro bono or non-billable.

I just left BigLaw so yes I get the difference.

These are billable hours that my boss says "can't" be billed because the client won't pay BUT the client was never paid.

I'm an experienced, 10+ year attorney with experience at BigLaw. I am very efficient.

I have never heard of this issue.

I think I just need to leave. This is not working for me.

[Anonymous]

Anonymous wrote:Bonuses are always based on hours the firm can bill, not on what an attorney puts on a timesheet. And sometimes bonuses are based on the hours a firm is paid. If a client disputes your hours and the firm agrees to cut them, that can reduce your bonus as well.

This really is the norm. I have never heard of anything different with firms that pay based on billable hours. The name says it all - billable, not hours worked or recorded on the timesheet.

Of course we're not talking about a timesheet. I got paid $0 for training, hiring paperwork, etc. I am only getting paid for actually billable hours.

E.g., my "timesheet" (if I used one) may say 8 AM-8 PM (12 hours) but my billable hours that day may only be 7 for whatever reasons.

[Anonymous]

Anonymous wrote:I wouldn’t go nuclear over your first month. It takes a little time to figure out each firm’s billing structure. If you are still having this problem after 4 months, it might not be a good fit for you.

I usually have to write off a lot of « billable » hours for my new associates, even the senior ones. If something normally takes 5 hours and the client is used to paying for 5 hours, I can’t bill the client for 20 hours just because it took a new associate that long. I just have to eat that cost myself at my firm. Your firm makes you eat that cost. I don’t really mind if it only takes a few months for the associate to get up to speed. It starts to bother me when I have to continuously eat those hours out of my own numbers. Your firm seems to have realized that associates don’t care when they tank a partner’s numbers if they keep getting paid and they have no incentive to work faster or more efficiently. You have an incentive to get faster because it will increase your pay.

I won't be able to do this many extra hours every month. It will kill me and I cannot have my salary be cut into half as a result. I was relying on that bonus Suddenly, $240k plus bonus becomes $120k and no bonus. I cannot pay bills.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I find it a little surprising that a senior attorney would not understand the difference between time billed to client matters, for which the firm will be paid, and time billed to internal activities or pro-bono, for which the firm no only won't be paid but often cost money.

There are some gray area activities around business development and attorney development that you could argue will make the firm money in the long run, but which are an expense in the short run, but firms tend to be stingy about how these are allocated regarding billable hour requirements.

But even when a firm allows such activities to contribute to a billable hours requirement for purposes of bonus structure, they generally cap them. While your firm has a somewhat unusual system for billable requirements, it's very common for firms to set out billable targets for associates for them to qualify for certain bonuses, and there is no firm out there that would allow an associate to count hours billed to internal firm matters, as opposed to actual client work the firm can charge for, as a significant portion of that billing target.

Again, it is really surprising to me that you would not know this... I'm guessing you have spent most of your career in government service or an in-house position? This is very standard for law firms and even if you find a job elsewhere that does an annual billing target instead of a monthly one, you will not find a firm that doesn't make this distinction with its billables and tie it to bonus structure. It would be irresponsible for them to do otherwise because it can seriously hurt firm profitability if you don't incentivize attorneys to focus on client billings.

I read this more as OP was billing client matters, but the numbers where cut. Like PP said, a client isn't paying 4 times the hours for a new associate to get up to speed. I doubt this is a case of pro bono or firm committee work not getting paid.

Ah, got it. I mean, that is common too but I can see how that's frustrating because you won't know until the bills go out what will be cut. The billing partner often makes that call and sometimes it's based on clear guidelines but other times it's based on experience with previous billing disputes.

My concern would be that every month it's a surprise to find out how much of my billed time is deemed "billable" by the partner submitting bills to the client.

[Anonymous]

Anonymous wrote:Probably something you should cleared up. If you don’t want to leave, you could ask your boss what kind of hours are cut and how you could avoid that in the future, or for a written definition of billable hours. Also, are you sure that the firm actually wrote off those 20 hours and did not collect payables for the hours you worked? If they did, that seems way more messed up.

The definition is in writing.

The problem is that what "can" be billed is being disputed.

I think all my hours billed can be billed. My boss thinks approx 85% of my hours can be billed and is giving client discounts off my hours and then subtracting from my pay.

[Anonymous]

Sounds like you have your answer, then. Quit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I find it a little surprising that a senior attorney would not understand the difference between time billed to client matters, for which the firm will be paid, and time billed to internal activities or pro-bono, for which the firm no only won't be paid but often cost money.

There are some gray area activities around business development and attorney development that you could argue will make the firm money in the long run, but which are an expense in the short run, but firms tend to be stingy about how these are allocated regarding billable hour requirements.

But even when a firm allows such activities to contribute to a billable hours requirement for purposes of bonus structure, they generally cap them. While your firm has a somewhat unusual system for billable requirements, it's very common for firms to set out billable targets for associates for them to qualify for certain bonuses, and there is no firm out there that would allow an associate to count hours billed to internal firm matters, as opposed to actual client work the firm can charge for, as a significant portion of that billing target.

Again, it is really surprising to me that you would not know this... I'm guessing you have spent most of your career in government service or an in-house position? This is very standard for law firms and even if you find a job elsewhere that does an annual billing target instead of a monthly one, you will not find a firm that doesn't make this distinction with its billables and tie it to bonus structure. It would be irresponsible for them to do otherwise because it can seriously hurt firm profitability if you don't incentivize attorneys to focus on client billings.

I read this more as OP was billing client matters, but the numbers where cut. Like PP said, a client isn't paying 4 times the hours for a new associate to get up to speed. I doubt this is a case of pro bono or firm committee work not getting paid.

+1

The new firm’s definition of billable hours is hours that ARE billed to a client, not hours that COULD be billed for working on client matters.

The attorney who reviews the bills will cut hours if an attorney spends too much time on a matter for the amount done and/or to keep a client’s bill down so they don’t go to another firm. At a reasonable firm, cutting hours for a new attorney getting up to speed and/or client relations is something the partners absorb. An inefficient attorney might get told to be more efficient at some point, but having been in big law and having reviewed bills when newbies are billing, it’s bad management to cut the hours an attorney credit for without significant warning, especially with a newbie.

My guess is the firm does this deliberately, as a bait and switch, because 150 hours a month is low for a patent litigator. Billable hours of 165-170/month means some excepted inefficiency is built in. The employment agreement allows the firm to define billable hours, so I’d agree with the employment lawyer. Find another job, preferably with a higher billable hours requirement that is linked to billABLE hours rather than billED.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bonuses are always based on hours the firm can bill, not on what an attorney puts on a timesheet. And sometimes bonuses are based on the hours a firm is paid. If a client disputes your hours and the firm agrees to cut them, that can reduce your bonus as well.

This really is the norm. I have never heard of anything different with firms that pay based on billable hours. The name says it all - billable, not hours worked or recorded on the timesheet.

Of course we're not talking about a timesheet. I got paid $0 for training, hiring paperwork, etc. I am only getting paid for actually billable hours.

E.g., my "timesheet" (if I used one) may say 8 AM-8 PM (12 hours) but my billable hours that day may only be 7 for whatever reasons.

You still don’t get it. Training and sign on paperwork wouldn’t go on a time sheet. Billable means only what can be billed to a client that the client will pay for. Your dispute is that you think your hours can be billed and your firm does not. You’re probably right that you need to leave. You aren’t going to last in an environment where you believe you, the attorney who is new to the business, knows more than the partners who have built the business and know the clients. It’s a bad fit.

[Anonymous]

An obvious issue is why the disputed hours were not billed. Some have speculated that the client wouldn't pay them, but why would they not do so? This seems to be the core issue - if you don't ask, you won't know why.