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[MaskedBanner]

Hey board,


I have seen a bunch of threads discussing the difficulties with accumulating billable hours in patent prosecution.  I understand the nature of the work requires intense concentration, and quite a few .1 or .2 hour jobs are done.  I still don't quite see why it takes say 12 hours to reach 8 billable.
 
I was hopping someone could give me a more in-depth description of what exactly makes billing difficult in patent prosecution, and how that compares to billing in law in general (with the exception of litigation).


thanks

[MYK]

I think the problem that patent practitioners are alluding to is that clients don't want to pay for twenty hours of work for an office action response, even when the task requires twenty hours (unless the client just wants to abandon the application).  As a result, patent practitioners are forced to underbill lest the client throw a screaming snit and walk.

[brclarke]

If you're a patent practitioner who works at a practice that has a billable hour requirement, then the odds are that I could do your job in 1/2 the time it takes you to do it.

Why?

Because you're not getting paid to work fast.

You are nice and settled, you've checked your AIPLA statistics to see what an appeal should cost, and your billing rate is likely more than you're worth, even at your slow level of production.

10k?

If you're billing at 300 an hour, that's 33 hours.

[Wiscagent]

I'll add my 2 cents (but only 1 billable cent) on this one.

As a former client, I would much prefer to know how long it actually takes to accomplish a task, and be billed for that amount.  I would have no problem paying a higher hourly rate for an efficient practitioner than for a less efficient practitioner.  (Assuming that in both cases a high quality work product is delivered.)  And if the bill includes more than one rate (e.g. 20 hours at the rookie rate + 5 hours at a higher rate for review or revision by a senior practitioner) that's fine too.

Most, law firms routinely distinguish "billable hours" from hours actually worked.  And that's fine to the extent that the client should not be (directly) billed for the hours the practitioner spends in staff meetings, flirting with co-workers, or redesigning the firm's letterhead.

But billing for fewer (or more) hours than actually worked on a case is a deceptive practice and should not be done.  The client and the practitioner can always negotiate on the rate or agree upon an adjustment, or a fixed price.  But the bill presented to the client should be scrupulously honest and transparent.

   ... 'nuf said   ...

[khazzah]

I still don't quite see why it takes say 12 hours to reach 8 billable.

As a result, patent practitioners are forced to underbill lest the client throw a screaming snit and walk.

MYK, aren't you confusing billABLE with billED?

The billing attorney is entitled to bill for every hour he spent on the client matter. It's the responsibility of the attorney managing the client to make the sure the time/amount billED to the client is appropriate.

To answer Original Poster's question....

A patent prosecutor's life is full of *lots* of *little* tasks. It's not unheard of to bill time to 10+ matters in a day.

• File 2 responses that you finished working on yesterday.
• Follow up with your assistant on 2 other matters that you worked on yesterday
• Speak to Examiner on 1 other matter
• Reminder email to client on 1 other matter
• Several back and forth emails to schedule invention disclosure meeting on 1 other matter
• Provide substantive recommendations to clients on 2 other matters (e.g.Appeal vs RCE, continuation or no)
• Perform in-depth work on 2 other matters.

As far as billABLE time goes, the real problem is that's it's hard to keep track of all the little 0.1s, 0.2s, and 0.3s. Yet if you *don't* keep track of them, then you arrive at your desk at 9 AM, leave at 7 PM, an have accounted for only the 6 hours you spent on the 2 in-depth tasks.

Non-billable time, which varies greatly among attorneys, comes on top of that. Chatting with your peers at the water fountain comes on top of that.

[khazzah]

As a former client, I would much prefer to know how long it actually takes to accomplish a task, and be billed for that amount. 

Wiscagaent, what about a flat fee arrangement where you have no visibility into how long the task took or into the hourly rate?

Would you object to this because you'd be afraid you were getting screwed -- that the $2000 response might have taken the associate only 6 hours, where you feel you paid for 7?

[Wiscagent]

khazzah -
  As I wrote in my earlier note, a flat fee is often a reasonable approach for both the client and the practitioner.  In a flat fee approach, it is important that the client and the practitioner agree on what is (and what is not) included in the fee.
  If you work for 7 hours and get paid for 6 hours or for 8 hours, that's not too bad for either party.
  The problem comes when you get paid for 6 and you work for 2 hours or for 18 hours.  One party or the other isn't happy with that.  But that's how business works, sometimes you do very well on a deal, other times you lose money.  If you're not comfortable with that, then you are better off working on an hourly basis.

[MaskedBanner]

A patent prosecutor's life is full of *lots* of *little* tasks. It's not unheard of to bill time to 10+ matters in a day.

    * File 2 responses that you finished working on yesterday.
    * Follow up with your assistant on 2 other matters that you worked on yesterday
    * Speak to Examiner on 1 other matter
    * Reminder email to client on 1 other matter
    * Several back and forth emails to schedule invention disclosure meeting on 1 other matter
    * Provide substantive recommendations to clients on 2 other matters (e.g.Appeal vs RCE, continuation or no)
    * Perform in-depth work on 2 other matters.


As far as billABLE time goes, the real problem is that's it's hard to keep track of all the little 0.1s, 0.2s, and 0.3s. Yet if you *don't* keep track of them, then you arrive at your desk at 9 AM, leave at 7 PM, an have accounted for only the 6 hours you spent on the 2 in-depth tasks.

So besides following up with your assistant, aren't all of the tasks listed billables? 

Also, if you keep rigorous track of all your little .1 s - .3s , should you still have that much trouble getting billable hours?

[khazzah]

So besides following up with your assistant, aren't all of the tasks listed billables? 

I consider ALL of the tasks, INCLUDING following up with the assistant, are billable. E.g., I ask my assistant to check PAIR to see if the Pre-Appeal has been decided on because tomorrow is 2 months from Notice of Appeal-- that's billable. I ask my assistant to prepare a Notice of Appeal and an Appeal Brief shell, that's billable. Billable because they're subtasks I'm performing in order to complete the big task which I'm paid to do.

Again, whether or not it's appropriate for the client to pay for any particular task is a separate issue.

Also, if you keep rigorous track of all your little .1 s - .3s , should you still have that much trouble getting billable hours?

Probably not. But I hope you see why it might be hard to keep track of the little tasks. My bigger point was that this difficulty in tracking time is a *big* part of the reason why it's hard to meet even billABLE targets.

I was a software developer in my previous life. I had a regular job, working 40 hours a week, 50 weeks a year. So I worked 2000 hours a year, right? Wrong.

[khazzah]

  The problem comes when you get paid for 6 and you work for 2 hours or for 18 hours.  One party or the other isn't happy with that. 

I can see that.

From the point-of-view of the attorney that put in 18 hours for something which he expected to take 6, that's 12 hours he could be billing on another matter. Or going home early. Sure, I'd be unhappy about that.

From the point-of-view of the client that saw 2 hours on the bill when he expected 6 ... is the client dissatisfied with the arrangement even *if* he is completely satisfied with the work product? Why does he care that the law firm made more profit than expected?

Does the client's dissatisfaction stem wholly from the idea that he paid more than he had to?

But that's how business works, sometimes you do very well on a deal, other times you lose money.  If you're not comfortable with that, then you are better off working on an hourly basis.

In my experience, flat fee arrangements are more common with volume work. You win some, you lose some, but the plan is that it all averages out so that both sides are satisfied. Without the volume, you can end up with one side winning and the other losing.

So I agree: If either side is dissatisified, the parties should re-negotiate the price or terminate the fixed fee arrangement.

Unless the reason the attorney took 18 hours is due to inefficiencies with him/the firm, rather than client-related issues (e.g., complexity of the work, more back-and-forth with inventors/inhouse counsel than expected). If the former, then the attorney should consider whether he can reduce these inefficiencies so that the work is as profitable as initially expected. If not, the attorney should re-negotiate or move to another arrangement.

[patentsusa]

I do just about everything on a flat fee basis.  That way, there are no surprises for the client.  The downside is that projects tend to grow on me, even though I tell clients up front that the fee may increase if the disclosure changes after I have made an estimate.  But I figure that the large corporate clients would do that to me too and expect me to absorb the loss, so I cut my other clients some slack.

But, yes, the answer to the original question is that some of the large high volume clients dictate what they will pay per matter, they don't really care what an attorney's billable rate is.  On the other hand, why should they, if firms are hungry enough for work that they will take low dollar work in exchange for volume.  The big problem is when a partner takes in low dollar work then gives it to associates who then get criticized for either not billing enough or not being efficient enough.  I think law firms need intake committees who put careful thought into which clients to accept.

[smgsmc]

I do just about everything on a flat fee basis.  That way, there are no surprises for the client.  The downside is that projects tend to grow on me, even though I tell clients up front that the fee may increase if the disclosure changes after I have made an estimate.  But I figure that the large corporate clients would do that to me too and expect me to absorb the loss, so I cut my other clients some slack.

But, yes, the answer to the original question is that some of the large high volume clients dictate what they will pay per matter, they don't really care what an attorney's billable rate is.  On the other hand, why should they, if firms are hungry enough for work that they will take low dollar work in exchange for volume.  The big problem is when a partner takes in low dollar work then gives it to associates who then get criticized for either not billing enough or not being efficient enough.  I think law firms need intake committees who put careful thought into which clients to accept.

You've really nailed it here.  My boss tried to hold out for $6K min/new app, but eventually broke.  No wonder ... I talked to a friend of mine at another firm.  They're raking in more business than they can handle (lots of overflow work for contractors) at $4K a pop.  I get regular e-mail from India pitching "standard" apps for $1200 and "complex" apps for $1700.  I heard Walmart is hiring for their new discount patent services (Aisle 12).

[smgsmc]

So besides following up with your assistant, aren't all of the tasks listed billables? 

I consider ALL of the tasks, INCLUDING following up with the assistant, are billable. E.g., I ask my assistant to check PAIR to see if the Pre-Appeal has been decided on because tomorrow is 2 months from Notice of Appeal-- that's billable. I ask my assistant to prepare a Notice of Appeal and an Appeal Brief shell, that's billable. Billable because they're subtasks I'm performing in order to complete the big task which I'm paid to do.

Again, whether or not it's appropriate for the client to pay for any particular task is a separate issue.

Also, if you keep rigorous track of all your little .1 s - .3s , should you still have that much trouble getting billable hours?

Probably not. But I hope you see why it might be hard to keep track of the little tasks. My bigger point was that this difficulty in tracking time is a *big* part of the reason why it's hard to meet even billABLE targets.
I was a software developer in my previous life. I had a regular job, working 40 hours a week, 50 weeks a year. So I worked 2000 hours a year, right? Wrong.

The problem is the huge overhead in tracking these time increments.  You end up spending over an hour of non-billable time each week just filling out and checking time sheets.  It's especially bad now that my firm is insisting on time sheets being submitted daily.   When it was on a weekly basis, at least I could lump 10 X 0.1 tasks spread out over several days into a single 1.0 task for one day.

[MYK]

I still don't quite see why it takes say 12 hours to reach 8 billable.

As a result, patent practitioners are forced to underbill lest the client throw a screaming snit and walk.

MYK, aren't you confusing billABLE with billED?

Probably.  But I remember a thread where someone was complaining that the firm only allowed 'N' hours to do an office action response, when it was taking quite a bit more.  To me, 'N' seemed very low;  a typical OA took me more like '4*N' -- but I was going through the entirety of the references, not just the snippets that the examiner referenced.

If you're told ahead of time, "maximum of four hours", is it really billABLE if it took you sixteen?

I only remember one where the examiner really obviously blew it, and where the whole thing only took a couple of hours to write up in final form.  More usually, I had to find conflicts between the references that made a combination unworkable, and that involved going beyond just the snippets.

OTOH, that one was the one where I saw another firm's cost estimate, and they wanted $1000 to do what took me two hours, and could have taken less if my boss wasn't being obnoxious about the whole thing.

[Itoen]

OTOH, that one was the one where I saw another firm's cost estimate, and they wanted $1000 to do what took me two hours, and could have taken less if my boss wasn't being obnoxious about the whole thing.

I'm not sure if I'm reading this right, but did the firm give a quote for a response to a particular office action?  That seems like a horribly inefficient way to do business, for the firm at least.