Last updated November 6, 2026
General information, not tax or legal advice. The rules depend on your country and your situation, so check anything with a tax or legal consequence with your accountant.
A law firm time and billing workflow runs from the engagement letter through time recording and pre-bill review to the final bill and payment, with client money handled separately. Agree the fee basis first, record time the same day with a proper narrative, have the responsible lawyer review each draft, then bill on a fixed cycle.
What are the steps in a law firm billing workflow?
A law firm billing workflow has eight steps, and each one exists to stop a particular problem turning up later.
| Step | Who | What happens | What it prevents |
|---|---|---|---|
| 1. Open the matter | Admin, responsible lawyer | Conflict check, client identification, a matter reference | Acting for someone you shouldn't, and time with nowhere to go |
| 2. Agree the fee basis | Responsible lawyer | Hourly, fixed or mixed, in the engagement letter, with rates and the billing unit | A first bill that comes as a surprise |
| 3. Record time | Every fee earner, daily | Matter, units and a narrative | Lost hours and vague bills |
| 4. Record disbursements | Fee earner, accounts | Court fees, counsel, searches, with evidence | Costs you paid and forgot to recover |
| 5. Review the pre-bill | Responsible lawyer, monthly | Read each narrative, write down what shouldn't be billed | Disputes after the bill has gone |
| 6. Issue the bill | Accounts | Numbered invoice with fees, VAT and disbursements | Bills that sit in draft |
| 7. Apply money on account | Accounts | Transfer from client account only as your rules allow | A client-money breach |
| 8. Chase | Accounts, then the lawyer | Reminders, then a call | Debt that gets older and harder to collect |
How should lawyers record billable time?
Lawyers should record time on the day it is worked, against a matter, in a fixed unit, with a narrative the client could read without explanation. Six-minute units are a common convention in hourly legal billing, but use whatever your engagement letter states. The billing increment chart converts minutes to units.
The narrative decides whether the entry survives a fee query.
Weak: "Work on file. 1.2"
Better: "Reviewed landlord's draft lease; marked up clauses 4 and 11; emailed client about the break right. 1.2"
Record all the time, including time you won't charge. Cutting it at review is a decision you can see. Time that was never recorded leaves nothing to learn from, and it makes the next fixed fee a guess. What happens to time you decide not to bill is covered in write-down vs write-off.
How do you review a bill before it goes out?
A pre-bill is the draft bill the responsible lawyer reads before it is issued, and it's the point where a fee problem is cheapest to fix. Read it as the client will: does each narrative explain itself, and would you be happy defending each line on the phone?
Here's an invented example. A three-person firm bills one month of work on a commercial lease. Recorded time is worth €1,366. At review, the partner writes off 0.8 of an hour of duplicated associate research, worth €112. The client paid €1,000 on account when the matter opened.
| Item | Hours | Rate | Amount |
|---|---|---|---|
| Partner | 1.5 | €220 | €330.00 |
| Associate (6.2 recorded, 0.8 written off) | 5.4 | €140 | €756.00 |
| Paralegal | 2.4 | €70 | €168.00 |
| Fees | €1,254.00 | ||
| VAT at 20% | €250.80 | ||
| Court fee paid on the client's behalf | €120.00 | ||
| Total | €1,624.80 | ||
| Less money held on account | −€1,000.00 | ||
| Balance to pay | €624.80 |
Realisation on this bill is 91.8%: €1,254 billed from €1,366 recorded. Tracked across matters, that number shows which kinds of work you keep writing down.
The court fee sits outside the VAT calculation here because the example treats it as a disbursement paid as the client's agent. Not every cost qualifies. HMRC's conditions in VAT Notice 700, section 25 are strict, the EU basis is Article 79 of the VAT Directive, and the guide to VAT on reimbursable expenses and disbursements goes through the test.
How do client money and trust accounts fit into billing?
Client money and trust-account rules vary by jurisdiction, and the rule that binds you comes from your own regulator or bar. The two examples below show how much they can differ. Neither one tells you what applies to you.
- England and Wales: under the SRA Accounts Rules, money received for fees and unpaid disbursements before a bill is delivered is client money (rule 2.1(d), with a narrow exception in rule 2.2). It is kept separate from the firm's own money (rule 4.1), and a bill or other written notification of costs must be given before client money is transferred to pay them (rule 4.3).
- United States: each state sets its own rules. Many are modelled on American Bar Association Model Rule 1.15, and they differ in the detail, including how a flat fee paid in advance is treated.
Elsewhere, ask your bar or law society. The billing point holds wherever you practise: money on account doesn't become your income because a bill exists. It moves when your rules say it can, and it's recorded in a ledger built for that purpose rather than in your invoicing.
What do corporate clients and insurers ask for on a bill?
Corporate clients and insurers may dictate a bill's format through their own billing guidelines. That can mean approved rates, limits on who can charge for what, and electronic bills in a format such as LEDES with UTBMS task codes. Read the guidelines before the first bill, because a bill that doesn't conform can be sent back unpaid.
How often should a law firm send bills?
A law firm should send bills on a fixed cycle, and monthly suits most hourly matters. A client can absorb a month's fees and still remember the work, whereas a bill covering six months is larger and easier to dispute. Fixed-fee matters bill at the stages agreed in the letter, which works the same way as progress billing on a project.
Running the billing side of a small practice in ERPFlow
ERPFlow runs the business side of a small law practice. It isn't a legal practice management system, and it has no trust accounting: no client-account ledger, no reconciliation of money held for clients and no conflict checks. Client money stays in the system you use for it today.
- Enquiries: a lead form on your website files each enquiry as a lead with its source, and it becomes a client record with its files carried over when you take the client on.
- Matters: open each matter as a project board linked to the client, with cards, owners and deadlines. Every member who can view projects sees every project, so a firm that needs ethical walls between matters will find that a real gap.
- Documents: engagement letters, saved emails (EML or MSG) and signed ASiC-E or BDOC containers can be attached to the client, the card or the invoice, up to 50 MB a file. ERPFlow stores signed files and doesn't sign them or check signatures.
- Bills: invoices carry tax per line and print in the client's language, and a monthly fee can run as a recurring invoice. Part payments are recorded by hand, and a reminder goes out only when you send it. Lines can't be negative, so show money on account in the invoice's Notes.
ERPFlow doesn't have a timer or timesheets today. Time tracking, including converting tracked time into invoices, is coming soon. At present you can type time spent onto a card, and it totals per matter and per client, but it doesn't become invoice lines. That suits practices on fixed fees and retainers. A firm billing in six-minute units should keep its current time-recording tool for now.
ERPFlow doesn't produce LEDES files, so clients who require them need a different route for those bills.