Law Firm Law Firm Billing and Finance 2

Question 1

What is the standard billing increment most US law firms use for recording time?

Accepted Answer

0.1 hours (6-minute increments)

Answer

Most US law firms record time in 0.1-hour (6-minute) increments, which is the standard minimum billable unit used in legal billing software.

Question 2

Which billing metric measures the total hours recorded by an attorney in a year?

Accepted Answer

Billable hours

Answer

Billable hours represent the total hours an attorney records as billable to clients in a given period — it is the primary productivity metric for most law firms.

Question 3

What is 'block billing' and why is it problematic?

Accepted Answer

Lumping multiple tasks into a single time entry, making it hard to assess reasonableness

Answer

Block billing combines multiple unrelated tasks into a single time entry, which courts and clients find objectionable because it prevents evaluation of whether individual tasks were reasonably timed.

Question 4

What does 'accounts receivable aging' show in a law firm's financial reports?

Accepted Answer

How long outstanding invoices have been unpaid, categorized by time bracket

Answer

Accounts receivable aging reports group outstanding invoices by how long they've been unpaid (0-30, 31-60, 61-90, 90+ days), helping firms identify collection problems early.

Question 5

What is a 'contingency fee agreement' in US law?

Accepted Answer

An arrangement where the attorney is paid a percentage of the recovery only if the case is won

Answer

In a contingency fee agreement, the attorney receives no fee if the case is lost, but receives an agreed-upon percentage (typically 33%) of any settlement or judgment if successful.

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Law Firm Practice Test

Law Firm Law Firm Billing and Finance 2