How ABA Model Rule 1.5 on “Fees” Impacts How Lawyers Can Bill for Their Fees and Costs

July 11, 2018

[Editor’s note: this is  another in a series of blog posts discussing how specific ABA Model Rules of Prof. Conduct (RPC) that all lawyers must follow impacts how lawyers can and cannot bill clients.]

If you read my first blog piece in this series, you will recall that I noted ABA Ethics Committee Formal Opn. 93-379 (1993) on Billing for Professional Fees, Costs,  Disbursements, and Other Expenses stated that several RPC affect how lawyers ethically can bill for their services. The Opinion specifically mentions RPC 1.1, 1.4, 1.5, 3.2, and 7.1 but notes that other Rules may also be implicated. So far, I have covered each of these RPC (and others) but for RPC 1.5 Fees.

As the name of the rule indicates, RPC 1.5 is all about fees.  RPC 1.5 is broken down in three parts. RPC 1.5(a) provides that a lawyer’s fees and expenses must not be “unreasonable,” RPC 1.5(b) is about a lawyer’s duty to communicate to the client the “scope of the representation and the basis or rate of the fee and expenses,” and RPC 1.5(c) addresses “contingent fee” situations.

I have already covered the duty of communication about fees in my post on RPC 1.4 on “communications.” And as contingent fees are not applicable in fee billing situations, I will devote this post to discussing just RPC 1.5(a).

The term used in RPC 1.5(a) that a lawyer’s fee and expenses not be “unreasonable” has been generally flipped in fee billing cases by courts which always discuss a lawyer’s fee and expenses in terms of whether or not they were “reasonable” rather than unreasonable.

Part RPC 1.5(a) lists 8 factors “to be considered in determining the reasonableness of a fee.” They are:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perorom the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances

(6) the nature and length of the professional relationship with the client’

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

A plain reading of these 8 factors indicate that they are applicable in those situations involving “fixed” or “contingent” fees rather than fees generated by hourly billing. Nevertheless, I note that some courts try to pound square pegs into round holes and mistakenly try to apply the 8 factors in RPC 1.5(a) to hourly billing situations as if they were the only factors to be used to judge the reasonableness of a fee bill. See, e.g., Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982 (Ind. Ct. App. 2014) trans. denied (May 15, 2015).

My impression in reading these types of cases is either that the judges (or their law clerks) have not bothered to read the abundance of case law on the subject or the attorneys representing the parties opposing the reasonableness of the billed for fees and costs failed to put the RPC 1.5 factors into proper perspective. For in Comment [1]  it is clearly stated that the “factors in (1) through (8) are not exclusive.” Moreover, the case law that has developed over the application of RPC 1.5 to hourly fee billing situations rarely if ever mentions the 8 factors in RPC 1.5(a).

So if  the  8 factors set out in RPC 1.5(a) cannot be used to judge the reasonableness of  billed for fees and expenses in an hourly billing situation, what factors are to be used? Well, if you have read my other blog pieces you will realize that there are quite a number of different factors courts have used in different situations to determine the reasonableness of a billed for fee or expense.

However, I believe that all different factors on determining reasonableness can be put into three categories. I will cover these three categories in my next post.

 

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Too Many Cooks? Determining The Right Mix Of Attorneys To Stir Into A Case – Part II

May 16, 2018

In my last post on this subject, I discussed the need to come to an upfront agreement with the attorney handling your case on the appropriate level and mix of any additional attorney staff that might be needed to handle your case. Notwithstanding the need to agree on the attorneys who might be regularly working on your case, I also stated that the attorney in charge of the case should have some flexibility to assign certain one-off tasks to other lower billing attorneys as the need arises.

I left off my last blog piece with the question of how do you determine if the additional attorney staff is warranted if the attorney handling your case says that more attorney staff is needed to work on your case? My response to  that question is that adding any additional additional attorney staff beyond that initially agreed upon should only be for one of four reasons. Here are those reasons:

  1. Special expertise is now needed.
  2. There is more work to do than anticipated.
  3. It will allow things to get done sooner rather than later.
  4. It will save rather than add costs.

With regard to point no. 1, perhaps a tax question or an environmental law question or some other question involving a specialty area of the law has arisen.  Using an attorney who already has special expertise in that area of the law may not only lead to a better result, but it may allow things to get done sooner and will save on the costs of getting one of the already approved attorneys up to speed to address the issue. (See points no. 3 & 4.)

Where the reason given is that there is more work to do than anticipated, the attorney should specifically address the “than anticipated” part of point no. 2. Why was it not anticipated? The answer may raise a red flag about the attorney you hired. Perhaps the attorney does not really have the level of experience he claimed to have with regard to the issues in the matter. Better to address that issue now rather than later on at a point of no return in the case.

Also, with regard to points 2, 3, and 4, what level of attorney (partner, senior associate, junior associate) is needed and why that level? While an experienced partner or senior associate might be needed to address point no. 1, absent a need for special expertise, most additional work (such as to pour through additional discovery documents) should be able to be handled by lower billing junior associates.

And why add more attorneys? Could paralegals handle the additional work or help get things done sooner, rather than later and at the same time save on legal costs? I have discussed the issue of staffing a matter in several of my prior blog posts including  “An Attorney’s Duty to Use Less Costly Personnel”.

In summary, the question of appropriate staffing a matter should begin at the outset of an assignment. If additional staffing is needed beyond that initially discussed, the reason(s) for the need for additional staffing should fit into one of the four separate reasons discussed above. If the reason given for adding additional staff does not fit one of these four reasons, then it could be a sign that your lawyer may the wrong fit for your case.

 


Too Many Cooks? Determining The Right Mix Of Attorneys To Stir Into A Case.

April 17, 2018

One of the most common complaints I get from individuals who submit gigantic legal bills for me to review is about the number of attorneys who billed to work on their case.

The most recent variant of this complaint came from a couple who hired an attorney whom they had determined had the requisite knowledge and experience to handle their case. But as it turned out, the attorney promptly handed over most of the work in the case to other attorneys in his office. And as the case drug on (and on), more and more attorneys wound up working on their case.

The couple thought that they were being overcharged because too many attorneys were working on their case. They had put this question to the attorney they had initially hired, but did not feel that had gotten a satisfactory response. And because of this issue as well as other billing issues, they turned to me. Read the rest of this entry »


How ABA Model Rule 1.3 on “Diligence” Impacts Lawyers Billing for Their Fees and Costs

March 15, 2018

[Editor’s note: this is another in a series of blog posts discussing how specific ABA Model Prof. Conduct Rules (RPC) that all lawyers must follow impacts how lawyers can and cannot bill clients.]

If you read my first blog piece in this series, you will recall that I noted ABA Ethics Committee Formal Opn. 93-379 (1993) on Billing for Professional Fees, Costs,  Disbursements, and Other Expenses stated that several Rules of Professional Conduct affect how lawyers ethically can bill for their services. The Opinion specifically mentions RPC 1.1, 1.4, 1.5, 3.2, and 7.1 but notes that other Rules may also be implicated.

Examples of other RPCs that may be implicated in billing situation were noted in a previous post on the Cook case. In that case, the attorney made out invoices that included fake time. The court found this to violate RPC 4.1 Truthfulness In Statements To Others and RPC 8.4 Misconduct. And so it is that RPC other than ones specifically mentioned in Opn. 93-379 can be implicated in billing situations.

On of the other RPC that could impact how a lawyer bills a client is RPC 1.3 Dilligence. This RPC provides that “a lawyer shall act with reasonable diligence and promptness in representing a client.” I had originally decided to skip over RPC 1.3 as I consider it more of a litigation management issue such as when a lawyer is slow to take necessary action or misses a SOL or filing deadline. But a colleague recently reviewed a bill where an issue of diligence was raised in a billing entry. Read the rest of this entry »


Legal Malpractice Insurer Advice To Lawyers: Engage in “Good Billing Practices” & Avoid “Billing Mistakes”

February 15, 2018

Recently, I made a stab at getting caught up on my reading. Included in my pile of reading material from the past several months was the Fall 2017 newsletter from the Lawyers Mutual Insurance Company of Kentucky (LMICK). As a proud, long time member of the Kentucky Bar Association, I am on LMICK’s  mailing list.

The reason I had put the LMICK newsletter aside to read when I had time was that I noted that several pages were devoted to legal billing issues. Coming at it from a “risk management” prospective, the newsletter admonished attorneys to engage in “good billing practices” and “avoid common billing mistakes.”

Here are some of what LMICK listed as “billing mistakes” along with their side comments: Read the rest of this entry »


Year End Legal Bills Should be Even More Closely Scrutinized as Lawyers & Paralegals Scramble to Meet Yearly Billing Targets

January 16, 2018

[The following is an update of a piece I wrote three years ago. Because of its importance  at this time of year I think the message bears repeating.]

It’s been said with good justification that “a lawyer’s pen gets heavier during the fourth quarter.”

Invariably, as the year nears an end, lawyers (and paralegals) scramble to find things to do in their files in order to make their firm’s hourly billing “targets” (i.e., goals) for the year. This invariably results in task padding as well as time padding.

Invariably I see more “drop-in” or “transient” billers show up in files during the last two months of the year than at any other time in the year. This is often caused by lawyers and paralegals begging their colleagues for work to do in order to reach their yearly billing targets. Read the rest of this entry »


The Consequences for Attorneys Who “Knowingly” or “Negligently” Engage in Improper Billing

December 13, 2017

[Editor’s note: this is another in a series of blog posts addressing specific ABA Model Rules of Prof. Conduct (RPC) that impact how lawyers can and cannot bill clients.]

In my last blog post, I discussed the case of People v. Mary Jaclyn Cook, 17 PDJ 051(Colo. August 10, 2017) in which a lawyer got suspended from the practice of law for just preparing to send out legal bills with false billing entries and then initially lying about it to her supervisors. The case opinion noted that the lawyer had violated several of the RPC.

Before continuing with my series of posts on how the RPC impact how lawyers can and cannot bill clients, I thought that in light of the Cook   case it might be good to pause and discuss the consequences to attorneys for violating the RPC when it comes to billing for fees and costs.

But before discussing consequences, let’s discuss a misconception of many attorneys that the RPC only apply to how they bill their clients. No less an authority than the U.S. Supreme Court has held that ethics in fee billing apply not only in situations involving the client, but also in situations involving the client’s adversary. See Hensley v. Eckerhart, 461 U.S. 424 (1983)(“Hours that are not properly billed to one’s client also are not properly billed to one’s adversary.” citing Copeland v. Marshall, 205 U. S. App. D. C. 390, 401, 641 F. 2d 880, 891 (1980) (en banc) (emphasis in original).). Read the rest of this entry »