Sticker Shock
Wrestling with your first pre-bill

by Alex Naito
YLS Futures Committee
 
You hear a lot about the challenges of starting out as a new lawyer, fresh from the safe intellectual confines of law school. There have been pages and pages written about how law schools fail to prepare students for the practical difficulties they will face once they are released into the big business that is the legal profession. Dealing with difficult clients, unforgiving partners, and wily opposing counsel. Figuring out how to bill enough hours to pay the rent, go to networking events and have a life all at the same time. And, on top of all these other challenges, there is the small matter of trying to learn the law as you go. I am not breaking new ground here, this is all something we have read before and experienced for ourselves. But there is one aspect of becoming a new lawyer that we do not hear much about heading into the profession, but something that is, at times, equally challenging. That is, coming to terms with the realities of billing for your services.
 
In many ways, I was prepared for the challenges of becoming a new lawyer and was braced for the sharp learning curve of reality. With so many websites and blogs like Abovethelaw.com and others, our generation knows all too well what to expect when we start practicing (not that it makes it any easier). So, in everything that has transpired since I started practicing six months ago, the biggest surprise for me was my reaction to seeing my first pre-bill. It is a brutal wake-up call, realizing for the first time that somebody is going to be paying real money for that memo you just spent 10 hours researching and writing, or the lease agreement you spent four hours reviewing.

There are many factors that can affect when this moment happens, and how it is received. For those practicing in larger law offices, this moment may not come for several months, or even years, if the partners you work for insist on handling the billing. For others, who may be starting out on their own, this moment will occur right away before they have the opportunity to feel comfortable in their practice. The shock value also varies depending on whether the bill is heading out to a large corporate client, or to a new couple starting their first business. Maybe it shouldn't matter, but the reality is that it is much harder to feel comfortable billing for our services when there is a "real" person on the receiving end. But no matter where you work, or who you work for, there is an internal conflict that new lawyers face in billing for their service and expertise.

On the one hand, many new lawyers feel guilty charging the amount they contracted for with the client. The reason for this guilt is because early on in a new lawyer's career the new lawyer may undervalue their contributions. They are still learning all the elements, rules, terminology and procedure that more experienced attorneys seem to know off the top of their heads. That creates a sense of guilt about having someone else pay for gaining that experience.

On the other hand, new lawyers feel justified because the clients sought out their services for a reason. Despite what people may say about lawyers, it is a unique profession that requires training, skill, and, most importantly, a license. And, hopefully, the time spent by the new lawyer actually benefits the client, who should then bear the cost of that effort. Furthermore, the new lawyer just spent three years (seven, counting college) and a lot of money to get that training, skill and license. This provides the new lawyer with a sense of justification, which conflicts with feelings of guilt.
 
The new lawyer must also take into account the client relationship. Clients may be unwilling to pay for certain types of services. The client may be turned away from bringing the lawyer more work if the bill is too high. On the other hand, it's a slippery slope to start giving clients discounts, because soon that becomes expected, even as the new lawyer grows in expertise and provides increasing value to the client. These are considerations that the new lawyer must account for when deciding to place a number on their value.

And there are, of course, forces at work in this equation that are outside the new lawyer's control. Billing rates established by the firm or dictated by the market drive the hourly rate charged by the lawyer. But in a profession that bills by the hour (for now), there is always an opportunity for lawyers to second-guess the value for their service. Should that project really have taken two hours? Could it have been done in one? Was I productive throughout that entire time? These are questions new lawyers, faced with that first bill, must wrestle with. And while most probably won't admit to it, this internal conflict can be very distressing.

What should the new lawyer do? One solution is to seek guidance from the more experienced attorneys. In large law firms, this is easy because the partners will often automatically apply their own judgment about the value of the new lawyer's services when they ultimately send out the final, marked-down bill. For new lawyers not in large firms, the new OSB mentoring program may provide a mechanism for getting advice on this topic.

Time can also help: Time for new lawyers to obtain the experience to start believing in the work they do, and the value they provide to the client. Once that experience builds up, the internal conflict will hopefully start to dissipate, at least to some degree.

But no matter how experienced or skilled the attorney, my guess is that these feelings never truly go away. In fact, it may be even harder at times later on in a lawyer's career, as friends become clients and vice versa, and the lawyer's billable rate increases. Therefore, it is important for new lawyers to recognize this conflict early on and begin developing confidence in their integrity and experience so that they feel comfortable that their bills are a true measure of the value they provided to the client.