Paul W. Carlson, CPA (00:00):
MyCase allows us to set user billing rates in two places. One place you can set billing rates is on the matter itself, and the other place is to set user default rates throughout the system. Long-term, we find that the default hourly rates within this type of billing system break and cause problems. So we suggest setting the default billing rate to $999, and then set specific billing rates within the matter.
(00:33):
So in MyCase, you create the matter, it lists all the firm employees, and you can set the rates there, or you can come into the case and contacts and staff and set the rates here. It's best practice.
(00:46):
So some logic, if you want to know why we do this. One, when firms set standard billing rates, there's always that one case that comes in and either they get a higher rate because they're going to be trouble or they get a lower rate because you're trying to do someone a favor. Well, if the firm project manager or office manager is used to just blindly accepting the hourly rates for all matters, that they kind of go to sleep and they stop watching the billing rates. Whereas if the expectation is that everyone knows these default rates are wrong, and every time they set up a matter, they need to go pull the fee agreement and enter the correct rates, that that helps ensure accuracy moving forward.
(01:31):
Then longer-term, if the firm sets default rates, they set these to really the rates they're using now. Usually in a year or two, the firm decides to raise rates on all new matters. Well, if you change these default rates, that this is going to change the rates on every matter that uses the new rate, that this default will update existing cases where the prices aren't supposed to increase and it's going to update rates on all new matters as well. That there's no way to tell this default rate to only apply to new cases and to leave old cases at a different level. So even if you do decide to use the defaults for a while, that the first time the firm begins to raise rates, you'll have to stop using this, because there's no other fix for this.
(02:35):
So again, just quick update. We like to use $999 as a default hourly rate, set real rates within the matters. And the reason we use a really high rate for the default is if we're previewing invoices that a $999 rate is going to be an obvious error to most folks.
(02:57):
The other thing is in a couple other videos, we're going to talk about monitoring work in progress or the value of time that you've already put into a matter. If this rate is too high, it's going to push us to stop work and actually come in and troubleshoot and find the problem. Whereas if we set this to a dollar an hour that the WIP values are too low and could actually lead us into trouble.
(03:22):
All right, thanks.
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