Rounding is a concept that we learn in math class at some point in elementary school, probably right after we learn about decimals. If your teacher gives you a decimal, like 5.8, and tells you to round to the nearest whole number, you learn that the right answer is 6, not 5. The only confusion is when you see a number like 5.5. The “.5″ is exactly in the middle – do you round up or round down? Most teachers will tell you that you always round up, so 5.5 is rounded up to 6, but 5.4 is rounded down to 5. I did have one creative teacher who told us that if it’s a Monday, Wednesday, or Friday, we round up; if it’s a Tuesday, Thursday, or Saturday, you round down; and if it’s a Sunday, you get to choose.
Lawyers have a reputation for not being good at math, but they certainly know how to round billable hours so that it favors them. Since billable hours are calculated based on 6 minute, or 0.1 hour increments, lawyers are faced with rounding questions when they bill, for example, 15 minutes or 32 minutes.
I’ve heard a lot of stories about how lawyers round their time, but almost always, they are rounding up. With the example of 15 minutes, it’s not a hard call. Even your math teacher from elementary school will say, you can round that up to 0.3 hours. But what about the 32 minute example? 32 minutes is closed to 0.5 hours than 0.6 hours, but what partner would want you to “write off” those extra two minutes? The rationale is that if you bill even a minute over the last increment, you get to round up to the next increment. Using this method, if you billed 31 minutes, you get to round up to 0.6. If you spent a minute reading a client e-mail, you get to bill 0.1 hours for it.
But things get even more complicated. Do you get to round up for each individual task you are performing for a client, or just round up at the end of the day? For example, if I spend 3 minutes reading client e-mail, 15 minutes drafting a letter, and 3 hours and 40 minutes preparing a legal brief, do I add all the minutes up first and then round up, or do I round up first and then add the minutes up? Using the first method, my total minutes add up to 3 hours and 58 minutes, which rounds to 4.0 billable hours. Using the second method, I round 3 minutes up to 0.1 hours, 15 minutes to 0.3 hours, and 3 hours and 40 minutes to 3.7 billable hours. The total is 4.1 hours.
In this example, the difference is only 0.1 hours, but that difference expands once you increase the numerous of tasks per day for one client. Our example used only three tasks, but if you performed 15 or 20 different tasks during that day, the difference could be huge.
Now, you are probably thinking: the second method seems unfair to the client. Rounding up for each individual task makes no sense if the client is being billed for the day as a whole. But what if the client insists on line-item billing?
Line-item billing differs from block billing. In block billing, you describe all the tasks that you did in one day for one particular client matter, and then place a number next to it representing the total hours you spent on all tasks. In line-item billing, you assign a number next to each individual task representing the amount of time spent on each task.
Some clients insist on line-item billing because they believe that it’s easier for lawyers to fudge numbers if they can lump all the work together into one number. It’s also impossible for clients to look at a bill and figure out how much time was spent in a meeting versus preparing a brief. As a result, it’s difficult for clients to determine whether their lawyers are being efficient, and whether there are areas where they can cut down on wasteful time.
The problem, however, is that line-item billing may also tempt some lawyers to round up for each individual task, as we see in the example above. Some lawyers may be guided by an inner moral compass, and approach line-item rounding by rounding up and rounding down equally, so that everything balances out in the end; others may not.
How do you approach the rounding issues in your daily practice? Do you round up, round down, vary it? Do you change your rounding practices depending on whether you are block billing or line-item billing? Post a comment and let me know!
