To review your billing practices, that is. Give yourself the gift of financial peace of mind by taking a fresh look at your billing practices and ensuring your legal bills reflect your true value.

Starting at “0” on January 1 can be a little deflating. After what was likely a strong push at the end of the year, whether you were striving to hit an hourly or financial goal or encouraging clients to make that final payment before year end, it can be difficult to keep the momentum going into the coming year. So, perhaps take a minute during the lull between Christmas and New Year’s to review your billing practices and consider what improvements you can make in 2026.

What Are My Ethical Obligations When Billing My Clients?

But first, the rules. Sometimes, the more you are involved in the administration side of the practice, the more you can become removed from the “why” when it comes to your bills.

ABA Model Rule 1.5 governs our duties with respect to the fees we charge our clients. While it may seem like a simple transaction – you set an hourly rate or contingency fee percentage and the client agrees to pay it – there are several considerations when determining a reasonable fee for your work. The Rule outlines factors such as the time and labor required, the novelty of the legal issues involved, and what fees are customarily charged in your area for similar services. You may also consider the amount of money at stake, the nature and length of the professional relationship with the client, and your level of knowledge and experience. While you can set a general hourly rate for the year, note that you can adjust that rate depending on the circumstances. In other words, if you have a longstanding relationship with the client and they find themselves embroiled in high stakes litigation with novel legal questions, you may consider increasing your rate. However, remember that any changes in your rate or increase in the anticipated expenses should be communicated to the client in writing.

Although an exception to Rule 1.5 exists such that lawyers do not have to provide a new written fee agreement for regularly represented clients if they will be charged the same rate, a new year is a good opportunity to review your existing agreement. You may find that you have not increased their rate for a couple years or that even if you do not intend to increase their rate, you should provide them with an updated agreement if you have revised your general form.

Rule 1.5 also governs contingent fees. Subsection (c) of the Rule requires a contingent fee agreement to be in writing and specifically state the percentage or percentages that accrue to the lawyer in the event of settlement, trial, or an appeal. Make sure your clients understand how the expenses will be deducted from the recovery, including whether they will be deducted before or after your fee is calculated. Your contingency fee agreement should also explicitly state what expenses the client may be liable for whether are not they are the prevailing party.

Finally, in the excitement of settlement and anticipation of disbursement, you may overlook the need to provide the client with an accounting. Note that the Rule requires that upon conclusion of a contingent fee matter, you must provide a written statement, itemizing the fees, expenses, and remittance to the client, based on your fee agreement. As a best practice, have your client sign this statement with an acknowledgement of its accuracy before disbursing funds.

What Are My Ethical Obligations When Billing My Clients?

While fully revamping your billing practices and procedures may seem a little daunting, consider making a single change to increase your efficiency or accounts receivable this year. For example, commit to sending a bill immediately when you achieve a major milestone in the case. Because briefs can come with a hefty price tag, send the bill with a copy of the Order of Summary Judgment inyour favor. The client may promptly pay in appreciation of your hard work and the successful result.

And while legal services don’t necessarily go on sale (though your client may expect it after being inundated with holiday ads and emails), consider periodically offering professional discounts throughout the year. For example, document every phone call and email you have the client (this recordkeeping is essential for malpractice protection as well), but you may be able to write off a few of those courtesy communications as the matter progresses. Likewise, if you discover some inefficiencies on a bill – like excess time spent on research or revising a demand letter – flag them, reduce the charge accordingly, and show the write-off on the invoice so the client can see the added value at no cost. It may not be a blockbuster holiday discount but everyone appreciates feeling like they received something “extra,” including clients.

I have fielded several phone calls this year on our Risk Management Hotline during which lawyers acknowledged a phone call may have been better received than an email – whether to a client or opposing counsel. While it is undeniably easier to send a quick email than to call a client about a recently issued larger bill, taking the time to invite the conversation and address any questions can foster trust and help prevent any potential fee disputes. Remember – you want to be the phone call they make for any future representation opportunities or referrals. While a difficult phone conversation may be uncomfortable in the moment, it can promote timely payment and ultimately make a difference in your bottom line.

Finally, be proactive in training your associates how to bill. Consistent billing entry techniques across the firm are important to ensure your clients receive timely andaccurate statements. For example, consider adopting a firm-wide formula as to how each entry should read. You may also require contemporaneous timekeeping as a task is completed and have a weekly deadline for all time to be entered. These policies will ensure that attorney time is appropriately captured, and it will likely save you time in reviewing bills before they are sent.

What Is The Impact of AI On Billing?

The intersection of artificial intelligence and legal billing is just one of the many issues our profession faces when it comes to ethically integrating AI into our practices. As more and more firms are turning to AI to increase efficiencies in delivering legal services, an increased need for billing transparency is necessary.

In July 2024, the ABA issued its first formal opinion, Formal Opinion 512, regarding the use of AI in the practice of law, in which is specifically addressed Model Rule 1.5. The opinion states that if a lawyer uses an AI tool to draft a pleading and spends fifteen minutes inputting information into the platform (subject to their client’s agreement and adherence to confidentiality constraints, of course), they may charge for that time plus the time necessary to review the draft. So, be mindful of the time actually spent on a task as padding your time is a clear breach of your ethical duties to provide a reasonable – and accurate – bill for your fees.

Amid the flurry of the holiday season and yearend obligations, take a moment to reflect on billing enhancements and efficiencies you would like to bring into 2026 as you neatly tie a bow on 2025.

Kate Gould, Esq.

Kate Gould is a Risk Management Consultant for AttPro. She is a frequent co-presenter for AttPro’s free CLE webinars. Despite having a Christmas Eve birthday, her parents always wrapped her gifts in birthday paper – something she now fully appreciates as an adult navigating the busy holiday season!