Law Firm Law Firm Billing and Finance

Question 1

What is an 'IOLTA account' as used by US law firms?

Accepted Answer

Interest on Lawyers' Trust Accounts — a pooled trust account for small client funds

Answer

An interest-bearing operating account for law firm revenues

Answer

An investment account for law firm retirement funds

Answer

An IRS-designated account for tax-exempt legal fees

Question 2

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

Accepted Answer

The percentage of billed hours actually collected as payment

Answer

The ratio of associates to partners

Answer

The percentage of matters that go to trial

Answer

The number of new clients acquired per quarter

Question 3

Which billing method charges clients a fixed amount regardless of actual time spent on the matter?

Accepted Answer

Flat fee billing

Answer

Hourly billing

Answer

Contingency billing

Answer

Blended rate billing

Question 4

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

Accepted Answer

A reduction in billed hours or rates before the invoice is sent to the client

Answer

The process of writing off a fully uncollectible account

Answer

An increase in a client's billing rate

Answer

A firm's year-end tax deduction for bad debts

Question 5

What does the term 'matter origination credit' refer to at a law firm?

Accepted Answer

Credit given to the attorney who brought the client or matter to the firm

Answer

The number of matters opened in a quarter

Answer

The initial retainer payment from a new client

Answer

The tax credit for pro bono hours

Question 6

What is a law firm 'retainer' in the context of billing?

Accepted Answer

An advance payment held in trust and drawn down as fees are earned

Answer

A monthly flat fee for unlimited legal services

Answer

A success bonus paid after a favorable verdict

Answer

A filing fee paid directly to the court