The Three R’s of Reasonableness of Legal Bill Review

August 15, 2018

In my last blog post on how the ABA Model Rules of Prof. Conduct (RPC) affect how lawyers can bill for their fees and costs, I noted that RPC 1.5 mandates that fees and costs be “reasonable.” I also noted my belief that all different factors courts use to determine reasonableness can be put into three categories.

Those three categories are:

  • The reasonableness of the “task” performed
  • The reasonableness of the ”person” performing the task
  • The reasonableness of the ”time” spent performing the task

In my seminars on How to Review Legal Bills Like a Pro©, I often ask participants what do they look for first when they review a legal bill. Many times the answer back is they look first at the time billed for the tasks. However, that is the last thing that should be looked at when reviewing a legal bill.

To properly review a legal bill (and save time), it is important to look first at the reasonableness of the “task” preformed. If the task is not appropriate or reasonable, then it is irrelevant and pointless to further examine the tasks to determine the reasonableness of who performed the tasks or the reasonableness of the time spent performing the tasks.

For example, if a task is a “clerical” task, it makes no difference who performed the task or how much time it took. This would be so even if an attorney performed the task. See Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)(“The value of a service is not enhanced just because lawyer does it.”).

If it is determined that a task is reasonable or appropriate to do or bill for, then the next thing to look at is the person performing the task. For even though the task itself may be reasonable, the person performing the task may be unreasonable.

For example, a partner may be doing a task that an associate could have done or an associate may be doing a task that a paralegal could have done. In such situations, the billing rates should be adjusted appropriately. See Klimbach v. Spherion Corp., 467 F.Supp.2d 323, 332 (W.D.N.Y. 2006)(“The tasks performed by a partner that should have been performed by either an associate or paralegal will be charged at the proper associate ($180) and/or paralegal ($95) rate. In addition, any tasks performed by an associate that could have been performed by a paralegal will be charged at the hourly rate of $95.”).

Finally, after determining the reasonableness of task and then the reasonableness of the person performing the task is it appropriate to review for the reasonableness of the time billed for the task.

Of course, reviewing legal bills for the reasonableness of the task and the person performing the task are relatively easy to do when compared with reviewing the time billed to perform the task. Lists of tasks that are billable or non-billable as well as lists of tasks that should be performed by a partner or an associate or a paralegal can be easily compiled for reference. But, it is not so easy to compile a list of how much time it should take to perform tasks.

But instead of spending time trying to compile a list of permissible time to perform tasks, it may be better to apply some basic “rules of thumb” to how much time is should take to perform certain tasks. I have provided some basic rules of thumb in a prior blog post.

Of course, determining how long any task should take is more art than science when it comes to reviewing billing entries. I have trained both file handlers as well as legal bill review units at insurers and other types of companies on this as well as other legal bill review issues. If you are interested in legal bill review training that can be tailored to the needs of your staff, please contact me at jconlon@legalbillaudit.com.

 

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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: Read the rest of this entry »


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 »