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A Brief History of the Billable Hour

The billable hour. It's both a loved and vilified institutional mainstay of the legal profession. It has been, up until very recently, the undisputed measure for associate performance at the nation's best law firms for the better part of half a century. But does anyone really know the background of this traditional practice?

Here is a quick summary of the background of this polarizing billing practice.

SEC Approves Landmark Crowdfunding Rules. This One Is Big.

The SEC just approved changes to crowdfunding rules that will allow small companies looking to raise money to seek investment from small, non-accredited investors. Who are those non-accredited potential investors? Just to give you an idea, that's about 91 percent of American households.

The traditional model required complicated underwriting processes for equity investing. The new crowdfunding changes are some of the most sweeping made to the model of buying and selling securities to date.

When it comes to litigation, parties have got to pay their own way. It's just the way we do things here -- it's called the American Rule for a reason. But all rules come with exceptions. The American Rule can be broken and attorney's fees awarded, in order to protect the public interest, to punish parties who refuse to settle, or simply to increase a law's effectiveness.

Take the Patent Act. The Act's fee-shifting provisions allow an award of attorney's fees to the prevailing party in exceptional cases. Thanks to a Supreme Court ruling last year, "exceptional" has become a bit more common.

There aren't many lawyers who went into law because a career in theoretical mathematics would have been just too easy. In fact, many of us can probably get away with counting on our fingers much of the time -- except when it comes complex patent litigation. Or to client funds. Lawyers' ethical responsibility to maintain a client's funds in trust is one of the most common reasons lawyers face disciplinary action.

As a rule of thumb, you should strive to manage your client funds so that, should you die tonight, everything would remain in order. Of course, we don't always live up to that ideal. So, if you find an accounting mistake in an trust account, what sort of ethical issues might arise and what must you do about it?

People are cheap, they like free things, and paradoxically, this can be a great way to get into their pocketbooks. How can you turn a giveaway into a payday? For many lawyers, it's via the free consult, where attorneys meet with potential clients, answering basic questions and providing simple advice.

But, when your product is your legal expertise, does it make sense to give it away? Like so many things, the answer is "it depends."

Virtual Law Office 105: Processing Credit Card Payments

How complicated is getting paid by credit card?

In an ideal world, one would only need a credit card processor, such as the many ones we've talked about that handily operate via an attachment to your smartphone. If a food truck can take plastic, lawyers certainly should be able to do so too, right?

Except IOLTA accounts. Damn trust accounts. If you're taking payment in advance of services rendered, things get immensely complicated because most credit card processors take their cut out of what the consumer pays -- which creates an obvious ethics issue for unearned fees that are supposed to be sitting in your IOLTA account.

52 Ways to Reduce Overhead in Your Law Office

One of the biggest shockers of working in a real law firm during and after law school was the amount of money wasted on overhead. Examples include leased copy machines (for small firms, that's a waste), complicated IT setups (virtual machines as a means of backing up and sharing data? One word: cloud storage), and dead trees (printing, copying everything).

Let's cut the fat, shall we? I've got 52 ideas, some good, some redundant, some "penny wise and pound foolish," for doing exactly that.

(Sidebar: Why 52? The number is in honor of one of my favorite Kansas City Royals, Bruce Chen, who was designated for assignment on Friday after a handful of years of faithful service, a lot of great jokes, and a few autographs for yours truly during Spring Training.)

5 Ways to Maximize Your Billable Hours (Without Being Unethical)

Groan. The dreaded billable hour, which, like the last five minutes of a football game, never seems to end. Obviously you need to bill all your time, and you've got to be ethical about it, but are you selling yourself short? A survey conducted by timekeeping software provider Chrometa of 500 professionals who bill by the hour revealed that they captured just 67 percent of their billable time.

How do you squeeze the remaining 33 percent of that time out of your day? Here are five things you can do to make sure you're maximizing your billable hours:

No IRS, Law Firms Shouldn't Have to Use Accrual Accounting

Relax folks: unless you are really successful, this proposed tax "reform" won't affect you.

Section 3301 of the Tax Reform Act of 2014 [PDF], as it is currently drafted, applies to personal services businesses with ten million dollars or more in annual gross receipts -- a figure most solos and small firms can only dream of. But if you're an attorney to the stars, or a small firm that does big business, or if inflation gets really bad, a mandated switch to accrual accounting, instead of cash accounting, will be a major pain in your behind.

Besides, even if you're solo now, who's to say that you won't team up, or make it big, at some point in the next few years?

The Case for Setting a Low Hourly Rate

Some call it a race to the bottom.

Some say that you're a lawyer, and you deserve to be paid $300 to $500 an hour.

Alright, but what percentage of the population can afford to pay such a rate? And can you afford to charge less, while still making a living and paying off your student loans?

What's the sweet spot?