Why Billing and Timekeeping Matter for Paralegals

Accurate timekeeping is one of the most important practical skills for any paralegal. Law firms generate revenue by billing clients for the time attorneys and paralegals spend on their matters. Paralegal time is billable at lower rates than attorney time, making paralegals a cost-effective resource that clients value. However, the value of paralegal work is only captured when time is recorded properly.

For paralegals preparing for the NALA Certified Paralegal exam, understanding billing practices is tested in the ethics and practice management sections. Beyond the exam, strong timekeeping habits will make you a more valuable employee and help you demonstrate the tangible contributions you make to your firm.

Understanding Billing Models

Before diving into timekeeping practices, paralegals should understand the different fee arrangements law firms use:

Hourly Billing

The traditional billing model, where clients pay for each hour (or fraction of an hour) of work performed. Paralegal hourly rates typically range from $75 to $200 per hour, depending on the geographic market and area of practice. Time is usually recorded in increments of six minutes (one-tenth of an hour) or fifteen minutes (one-quarter of an hour).

Flat Fee Arrangements

Some matters are billed at a fixed price regardless of the time spent. Common examples include real estate closings, simple wills, and uncontested divorces. Even under flat fee arrangements, paralegals should track their time for internal management purposes.

Contingency Fees

In personal injury and some other cases, the firm receives a percentage of the client's recovery rather than hourly fees. Time tracking remains important for case management and cost analysis even when time is not directly billed to the client.

What billing increment should paralegals use?

Most firms bill in six-minute increments (tenths of an hour), where 0.1 equals six minutes. Some firms use quarter-hour billing (0.25 increments). Always follow your firm's policy. Under the six-minute system, a task taking eight minutes would be billed as 0.2 hours, while a task taking three minutes might be billed as 0.1 hours (the minimum increment).

Best Practices for Accurate Timekeeping

Record Time Contemporaneously

The single most important timekeeping habit is recording your time as you work, not at the end of the day or week. Studies consistently show that attorneys and paralegals who reconstruct their time later underreport by 10 to 40 percent. Use a timer, keep a running log, or enter time into your billing software immediately after completing each task.

Be Specific and Descriptive

Vague time entries frustrate clients and can lead to billing disputes. Compare these examples:

Poor: "Research" (0.5 hours)
Better: "Research state statute of limitations for medical malpractice claims involving minors" (0.5 hours)
Poor: "Draft letter" (0.3 hours)
Better: "Draft correspondence to opposing counsel regarding outstanding discovery responses" (0.3 hours)

Use Active Verbs

Begin each time entry with an active verb that describes what you did. Common billing verbs include:

Reviewed, analyzed, researched, drafted, prepared, organized
Communicated with, conferred with, corresponded with
Compiled, indexed, summarized, updated, revised
Attended, participated in, coordinated

Separate Tasks by Activity

When you perform multiple tasks on the same matter in a single session, consider whether to record them as separate entries. Block billing (combining multiple tasks into one entry) is discouraged by many courts and clients because it makes it impossible to evaluate the reasonableness of time spent on each activity.

Build your understanding of legal billing ethics and practices with our CP exam flashcards, which cover fee arrangements, billing ethics, and trust accounting.

Common Timekeeping Mistakes to Avoid

Padding time: Recording more time than actually spent is unethical and can constitute fraud
Underreporting: Failing to capture all billable time reduces firm revenue and underrepresents your contribution
Vague descriptions: Entries like "work on file" or "miscellaneous" provide no value to clients
Block billing: Lumping multiple tasks into one entry obscures how time was spent
Delayed entry: Waiting until the end of the week to enter time leads to inaccurate records
Billing for non-billable tasks: Administrative tasks, personal time, and general overhead should not be billed to clients

What tasks are typically billable for paralegals?

Billable paralegal tasks include legal research, document drafting and review, case file organization, court filing preparation, client communication (when substantive), deposition preparation, discovery management, trial preparation, and other tasks requiring legal knowledge. Non-billable tasks typically include administrative duties like photocopying, scheduling, filing, and general clerical work. The distinction matters because billing for clerical tasks performed by a paralegal is generally considered improper.

Trust Account and IOLTA Basics

Paralegals should also understand trust accounting, which is closely related to billing. Client funds held by the firm (such as retainers and settlement proceeds) must be kept in a trust account separate from the firm's operating funds. Interest on Lawyers Trust Accounts (IOLTA) programs direct the interest earned on these accounts to fund legal aid and other public purposes. Mishandling trust funds is one of the most common grounds for attorney discipline, and paralegals who handle billing must understand the rules.

Billing Software and Technology

Modern law firms use practice management and billing software to track time, generate invoices, and manage accounts receivable. Popular platforms include Clio, MyCase, PracticePanther, and TimeSolv. Paralegals should be proficient in whatever system their firm uses and understand how to enter time, review pre-bills, and assist with invoice preparation.

Ethics of Legal Billing

The ethical rules governing legal fees apply to the entire firm, including paralegals. Key ethical principles include:

Fees must be reasonable (Model Rule 1.5)
Fee agreements should be in writing, especially contingency arrangements
Client funds must never be commingled with firm funds
Billing fraud, including inflating hours or billing for work not performed, is grounds for discipline and potential criminal prosecution

Strong billing skills make you indispensable in any legal setting. Sign up for our CP exam preparation program to study billing ethics, trust accounting, and all other topics covered on the NALA certification exam. Explore our pricing options to find a plan that works with your schedule and budget.

Paralegal Billing and Timekeeping Best Practices