Law Firm Billing and Financial Management

Question 1

What is a billable hour in law firm practice?

Accepted Answer

A unit of time an attorney works on a client matter that is charged to the client

Answer

A billable hour is a unit of attorney time spent on client work that is recorded and charged to the client according to the agreed hourly rate.

Question 2

What does 'realization rate' measure at a law firm?

Accepted Answer

The percentage of billed amounts that are actually collected from clients

Answer

Realization rate measures how much of the fees billed to clients are ultimately collected, indicating collection efficiency.

Question 3

What is a 'contingency fee' arrangement?

Accepted Answer

Attorney fees are paid as a percentage of the amount recovered only if the case is won

Answer

In a contingency fee arrangement, the attorney is paid a percentage of the recovery only if the case succeeds, with no fee if the client loses.

Question 4

What is a 'flat fee' billing arrangement?

Accepted Answer

A fixed amount charged for a specific legal service regardless of time spent

Answer

A flat fee is a predetermined, all-inclusive charge for a defined legal service such as drafting a will or handling an uncontested divorce.

Question 5

What is 'write-down' in law firm billing?

Accepted Answer

Reducing the amount billed to a client below the standard rate or time recorded

Answer

A write-down occurs when an attorney reduces the billed amount from the full recorded time, often for efficiency, client relationship, or value-based reasons.

Law Firm Practice Test

Law Firm Practice Test

Law Firm Billing and Financial Management