ALA ALA Financial Management and Billing 2

Question 1

What is a blended billing rate?

Accepted Answer

A single rate applied to all timekeepers regardless of seniority

Answer

A blended rate is a single uniform hourly rate applied across all attorneys on a matter, regardless of individual seniority levels.

Question 2

Which budgeting approach starts each period from zero without reference to prior budgets?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every expense to be justified anew each cycle rather than adjusting prior-year figures.

Question 3

Under IOLTA rules, interest earned on pooled client trust accounts goes to:

Accepted Answer

State bar legal aid programs

Answer

Interest on Lawyers' Trust Accounts (IOLTA) is directed to state-administered programs funding access to justice and legal aid.

Question 4

What is a key risk of commingling client and firm funds?

Accepted Answer

Professional discipline and potential disbarment

Answer

Commingling client funds with firm funds violates professional conduct rules and can result in bar discipline, including disbarment.

Question 5

What does accounts receivable (AR) represent in a law firm's financial records?

Accepted Answer

Money owed to the firm by clients for services already billed

Answer

Accounts receivable represents billed but unpaid client invoices that the firm expects to collect.

(ALA) Association of Legal Administrators CLM Practice Test