Question 1

What should an attorney's invoice include?

Accepted Answer

ABA Model Rule 1.5 and most state bar rules require itemized billing: dated time entries with the timekeeper (attorney/paralegal), task description, time spent (in 0.1 hour increments), rate, and amount. Expenses should be listed separately from fees, with original receipts available on request. Trust account drawdowns must be shown explicitly so the client can verify the running balance.

Question 2

How do I show retainer drawdowns?

Accepted Answer

Three lines on the invoice: "Total fees and expenses for this period: $X. Retainer balance applied: -$Y. Balance due: $Z" (or "Replenishment requested: $Z" if the retainer dipped below your maintenance threshold). State the retainer balance both before and after the drawdown so the client has a clean ledger. Most state bars require this transparency in trust accounting.

Question 3

Should I bill in 6-minute or 15-minute increments?

Accepted Answer

0.1 hour (6 minutes) is the legal-industry standard and what clients expect. 15-minute (0.25 hour) increments are seen as overcharging — a 4-minute call rounds to 15 minutes? Sophisticated clients (in-house counsel, GCs of mid-market companies) will challenge it. Use 0.1-hour increments for credibility; if your practice management software supports it, even consider 0.05-hour for very short tasks.

Question 4

How should I describe time entries to avoid privilege concerns?

Accepted Answer

Be specific enough to satisfy the client and any reviewing court, but careful not to disclose privileged communications. "Conference with client re: settlement strategy — 1.4" is fine; "Conference with client re: client's admission that he was speeding" is not. Generic enough patterns: "Research re: [legal issue]", "Draft [document]", "Conference with [opposing counsel/court/client]", "Review [filing/contract]". Most fee disputes turn on vague time entries; specific-but-not-disclosing is the sweet spot.

Question 5

How do I handle trust account / IOLTA drawdowns on the invoice?

Accepted Answer

After client approval of the invoice, you transfer earned fees from the trust account to your operating account. The invoice itself doesn't move money — your trust accounting software (Clio, MyCase, LawPay) does. The invoice just shows the deduction to give the client the math. State bar audits look at trust ledgers, not invoices, but a discrepancy between the two is a red flag, so keep them in sync.

Question 6

Do I owe sales tax on legal services?

Accepted Answer

In most US states, no — legal services are generally exempt. Hawaii, New Mexico, South Dakota, and a few others tax most services including legal work. Texas exempts most legal services but taxes "data processing" services that lawyers occasionally provide. Confirm with your state CPA or revenue department. Costs you advance on the client's behalf (court filing fees, expert witness fees, deposition transcripts) are pass-through expenses, not taxable.

Question 7

Should I separate fees from costs/expenses?

Accepted Answer

Yes, always. Fees (your billable hours) and costs (filing fees, expert fees, travel, transcripts, copying) are accounted for differently — costs are pass-through; fees are revenue. Most state bar billing rules require separation. List fees in one section and "Costs and Disbursements" in another with each cost itemized (date, vendor/court, description, amount). Mark recoverable costs explicitly if they were advanced from the trust account.

Question 8

What payment terms should I use?

Accepted Answer

30 days from invoice date is standard for matter-by-matter billing. For ongoing engagements, replenishment-on-receipt is common ("This invoice draws down your retainer; please replenish $X within 14 days to maintain a $Y minimum balance"). Late-payment interest is allowed in most states if it's in your engagement letter — typically 1–1.5% per month, but check your state bar's ethics opinions; some states cap it.

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