How ABA Model Rule 1.4 on Communication Impacts How Lawyers Can Bill For Their Fees and Costs

September 11, 2017

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

Rule 1.4(b) Communication provides that “[a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

In interpreting an attorney’s duty of “communication” pursuant to RPC 1.4, courts have held that an attorney has a mandatory ethical duty to “clearly explain” fees and costs to clients. See, e.g., Board of Prof. Resp., Wyoming State Bar v. Bruce S. Asay, WSB #5-1739, 2016 WY 47 (WY 2016)(court found that attorney violated rule 1.4 by failing to “clearly explain” to client the charges).

Providing a “clear explanation” has been interpreted to mean that each billing entry in a fee bill must be sufficiently explained. See ABA Formal Op. 93-370 at p. 3 (attorney must provide a “sufficient explanation in the statement so that the client may reasonably be expected to understand what fees and other charges the client is actually being billed”). Courts deny compensation for billing entries that are not sufficiently explained as they do not provide a basis for determining the reasonableness of the billed for fee or cost. See, e.g., Grievson v. Rochester Psychiatric Center, 2010 WL 3894983 at *8 (W.D.N.Y. 2010)(“Individual entries that include only vague and generic descriptions of the work performed do not provide an adequate basis upon which to evaluate the reasonableness of the time spent.”).

And it is important to note that it is not the lawyer, but the client who gets to decide on what constitutes a clear explanation of legal fees in a fee bill. See The ABA Lawyer Task Force on Lawyer Business Ethics, (1996)(“Each invoice should clearly identify the legal services provided in such specificity as the client requests.”). This is why in giving seminars to lawyers on ethical issues in fee billing, I encourage them to always go over their first legal bill to a new client with the client to ensure that sufficient explanations are being provided to the client f rom the client’s point of view.

And while I have become pretty good over the years at interpreting attorneys’ shorthand notations in fees bills, I sometimes get stumped. For example, my colleague, Don Douglass, recently called to my attention a billing entry he saw for “?”  That’s right, the only thing in the billing entry was a question mark.

Because of the number of grammatical and other obvious mistakes I too often see in legal bills, this leads me to another thing I always tell lawyers – read over your legal bills before you send them out! It not only makes good business sense, but it is also an ethical requirement. See ABA Task Force on Lawyer Business Ethics, supra, “Lawyer’s Responsibility in Preparation of Invoices” (“The lawyer responsible for billing should review each invoice to ensure, prior to sending an invoice to a client, that the invoice is reviewed for accuracy.”).

In reviewing invoices before they are sent out, a lawyer should not only correct the grammatical mistakes, but also correct insufficiently worded entries, duplicate entries, clerical tasks, etc. Courts calls this exercising “billing judgment.” See Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)( At all times, “the (fee) applicant should exercise `billing judgment’”). Fee bills that demonstrate a lack of billing judgment are typically reduced by courts. See Green v. Adm’rs of Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002)(“The proper remedy for omitting evidence of billing judgment does not include a denial of fees but, rather, a reduction of the award by a percentage intended to substitute for the exercise of billing judgment.”).

But RPC 1.4 is more than just mandating that lawyers provide clear explanations in billing entries and proofread fee bills before they are sent out. There also are important front end and continuing requirements for lawyers in terms of communications about costs – beyond just what is contained in the legal bills.

On the front end, RPC 1.4 mandates that lawyers must tell clients about alternative courses of action that may be less costly, but just as effective. See ABA Annotated Model Rules of Professional Conduct, supra, at p. 63 “Duty to Explain Law and Benefits and Risks of Alternative Courses of Action.” This is important information for the client to have in order to be able to properly evaluate or reevaluate his intended objectives. Moreover, as noted in my prior post on RPC 1.2, the lawyer must defer to the client in terms of the costs of the overall strategy and in my opinion, an attorney would not only be deficient in his responsibilities under the RPC, but also guilty of malpractice by failing to appropriately inform the client of other less costly alternative courses of action.

It is important to note that this duty of communication about less costly alternative courses of action is not only a “front end” requirement, but also a requirement that continues throughout the course of the legal representation. And where lawyers did not even attempt to consider a less costly strategy or kept information from the client that would have caused the client to pursue a less costly strategy, courts will act if the issue is properly framed. See, e.g., Simmonds v. N.Y.C. Dep’t of Corr., No. 06 Civ. 5298(NRB), 2008 WL 4303474, at *4 (S.D.N.Y. Sept. 16, 2008)(reducing fee award where “a reasonably thrifty client made aware of the adequacy of [plaintiff’s] core claims would have opted for less costly representation”).

On a continuing basis, RPC 1.4 mandates that the lawyer must “promptly” keep their clients informed of escalating legal costs. Of course, promptly sending out legal bills is a big part of this. But it also means promtly alerting or forewarning clients about impending matters that may cause an escalation in legal costs. See ABA Annotated Model Rules of Professional Conduct (7th ed. 2011) Comments to Rule 1.4 at p.57 (“A lawyer must promptly convey important information about the client’s matter.).

It should go without saying that being forewarned about impending increases in legal costs could cause a “reasonably thrifty client” to re-think strategy or even re-think the overall objectives of the representation. Lawyers who fail their RPC 1.4 responsibilities in this area are subject to attorney discipline. See, e.g., In the Matter of Daniel G. Areaux, 823 N.E.2d 1192, 1193 (Ind. 2005)(“The respondent violated Indiana Professional Conduct Rules 1.4(a) and 1.4(b) by failing to keep his client reasonably informed of her escalating attorney fees owed to respondent and Baker & Daniels.”).

Because many judges do not fully understand the impact of RPC 1.4 in disputed fee bills cases, it is important for a fee bill expert opinion to always include observations on RPC 1.4 as well as any other RPC violations. Unfortunately, though, most fee bill “experts” are not qualified as legal ethics experts and thus have no credibility to opine on attorney ethical rules violations.

One final comment – and this will be repeated throughout the course of these blog posts – the ethical requirements of the RPC with regard to lawyers’ billing for fees and costs apply whether the lawyer is billing to client or to someone other than the client (e.g., an insurer). That is to say, no where in the RPC does it say that a lawyer gets a free pass from complying with the RPC if someone other than the client is paying the lawyer’s legal bills. In fact, the U.S. Supreme Court has been held that a lawyer’s duty of reasonable billing applies even where the client’s adversary is paying the legal bills. See Hensley v. Eckerhart, supra (“Hours that are not properly billed to one’s client also are not properly billed to one’s adversary.”)(emphasis in original)).

In my next blog piece I will discuss how RPC1.5 Fees impacts how a lawyer can bill for fees and costs. As a reminder, the Rules I have selected for discussion are the same ones set out in ABA Standing Comm. On Ethics and Prof. Resp., Formal Op. 93-379 beginning at p. 4, as impacting how lawyers can bill for fees and costs.

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Have questions on the reasonableness of a large legal bill or need an expert opinion of the reasonableness of legal fees? If so, contact the only fee bill expert in the U.S. who has served as a Chair of a state bar Legal Ethics Committee and has qualified in court as an expert on legal ethics and the ABA Model Rules of Professional Conduct. For more information, contact John Conlon at jconlon@legalpointsllc.com

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How ABA Model Rule 1.2 on Client-Lawyer Relationship Impacts What Lawyers Can Charge

July 31, 2017

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

In this blog piece, I will discuss how Rule 1.2 Scope of Representation and Allocation of Authority between Client and Lawyer affects how lawyers ethically can bill for their services.

In setting out the allocation of authority between the client and lawyer, Rule 1.2 provides that the big picture items in a representation such as deciding on the “objectives” of the representation including whether to settle or arbitrate or go to trial are the client’s responsibility whereas the details in a representation such as deciding upon the “means” or the steps that need to be taken to carry out the strategy to achieve the objective are the lawyer’s responsibility.

But in deciding upon the steps involved to carry out the objectives of the representation, Rule 1.2 at Comment [2] provides that “lawyers usually defer to the client regarding such questions as the expense to be incurred.”  As a result, lawyers have a duty to discuss the costs of carrying out any proposed strategy with the client and get the client’s consent to the proposed costs.

In an “independent counsel” situation in an insurance context, a lawyer’s statement to a client that the “insurance company will pay my fees and costs” may not be an accurate statement. This would especially be the case if the lawyer has not actually reached an agreement with the insurance company as to the costs of the planned defense. Read the rest of this entry »


How ABA Model Rule 1.1 on Competence Impacts How Lawyers Can Ethically Bill

June 21, 2017

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

In this blog piece, I will discuss how Rule 1.1 Competence affects how lawyers ethically can bill clients.

Rule 1.1 specifically states that “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”  What Rule 1.1 means in essence is that when agreeing to take on a representation, a lawyer is impliedly – if not actually – making a representation to the client that the lawyer has the basic “legal knowledge” and “skill” necessary to handle the matter.

While issues related to competency can arise in any type of case, they most often arise in non-routine cases. Knowing as I do that most all lawyers hate to turn down business, lawyers often will say that they are competent to take on a case even though they have not handled that specific type of case before.  But if being fully truthful, what they are really saying is that while they believe that they have the “legal skill” to take on the case, they actually lack the “legal knowledge” on the types of issues involved in the case. Read the rest of this entry »


What Clients Should Know About How Attorney Ethical Rules Impact Billing for Legal Fees & Costs

May 4, 2017

If you were to ask a group of lawyers to name an ethical rule that applies to billing for fees, I would suspect at least 90% would name Rule 1.5 Fees – probably because it is the only ethical rule that has the word “fees” in the title!

Now ask those same lawyers to name other ethical rules that may also apply to fee billing and you would probably get mostly puzzled looks. For based upon my own experience in counseling scores of lawyers over the years on ethical issues involved in fee billing, I doubt that 1 in 100 lawyers could correctly name  another ethical rule, let alone several other ethical rules, that might also apply to their billing for fees and costs.

So what are the other attorney ethical rules that apply to billing for fees and costs? Most can be found in ABA Standing Comm. On Ethics and Prof. Resp., Formal Op. 93-379 (1993) “Billing for Professional Fees, Disbursements and Other Costs.” The Opinion discusses the various Rules of Prof. Conduct (RPC) that govern all attorney conduct and may be implicated in legal billing. They include among others, Read the rest of this entry »


A Primer on Increasing Hourly Billing Rates During the Course of a Representation

April 12, 2017

If you recently have had any of your attorneys ask for a 5% increase in their billing rates you might want to refer them to Judge Richard Posner’s recent decision in Prather v. Sun Life . In that case, he found a 5% increase in billing rate to be “excessive!”

Just for kicks, I encourage you to read Judge Posner’s entire opinion in the Prather case. The Judge is well known for his often thought provoking opinions and statements on a wide variety of subjects. He also sometimes has an entertaining tongue-in-cheek way of presenting his opinions and Prather is an example of this.

But back to the subject of increases in billing rates. I often come across this issue in reviewing legal bills in cases or other legal matters which drag on for years. So I thought it time to set out some basic facts on the subject. Read the rest of this entry »


CLM Advisors’ “Snapshot” is Interesting Picture on Use of Third-Party Legal Bill Review Vendors

March 10, 2017

CLM Advisors periodically conducts informal surveys of industry executives to capture how industry executives feel about different litigation and claim strategies. These results of these informal CLM Advisors surveys are compiled into a “snapshot.” Unlike CLM Advisors more formal in-depth “studies,” snapshots are intended to be more informal, point-in-time, “State of the Unions” on particular important aspects of the insurance industry.

With an end view of compiling a snapshot on the state of the use or non-use of third-party legal bill review (LBR) vendors in the insurance industry, CLM Advisors recently surveyed some 125 senior litigation and claims officers. The results of this survey presented an interesting picture on the “State of the Union” on the use of third-party legal bill review vendors in the industry.

But before getting into this Statue of the Union, a brief review of the history of the third-party legal bill review industry may be in order. Read the rest of this entry »


E-Filing is So Easy That Even a Lawyer Can Do It.

January 11, 2017

Electronic filing (e-filing) of documents with state courts  is sweeping the country. If it is not yet in your state, chances are that it will be soon. Here is a list of the status of e-filing in state courts in the states.

Preceding the implementation of e-filing programs, seminars and written material have been provided to lawyers and their staffs on how to use the e-filing system in their jurisdictions. Having attended some of those seminars, I can attest to the fact that e-filing is so easy that even lawyers can do it.

And judging from the time entries in legal bills that I review, many lawyers have begun to e-file their own documents instead of having the legal secretaries or assistants do it for them. Thus, the question: will attorney e-filing of their own documents eventually lead to another round of support staff layoffs like we experienced during the Great Recession? Read the rest of this entry »