Caution: “Chipping” Away at Block Billing Lawyers May Actually be Creating Legal Billing Loopholes

I would think that everyone who reads this blog (i.e., lawyers and those who review lawyers’ bills) already knows what the term “block billing” refers to and the problems associated with block billing. However, for those who do not know what block billing is, it is the use of a single time entry to describe two or more separate without disclosing how much time was spent on each task.

Most litigation and billing guidelines prohibit block billing.  And most courts that have ever considered the issue have condemned the practice for a variety of reasons.  See, e.g., Welch v. Met Life Ins. Co., 480 F.3d 942, 948 (9th Cir. 2007) (court finding that block-billed hours may overstate the hours incurred and make it more difficult to determine how much time was spent on particular activities).

While many lawyers may grouse about having to avoid block billing, some lawyers have thrived on the prohibition by finding a loophole. (But isn’t that what lawyers are supposed to do – find loopholes?). They have found that they can make up for the lost block billing revenue by engaging in what is known in legal bill review parlance as “chipping.”

Chipping occurs when a discreet task is broken down into multiple small tasks or parts with each being billed for separately. The following are examples of chipping:

  • billing separately to send a copy of the same letter to multiple parties
  • billing separately to read a short cover letter and a series of short attached documents (e.g., cover letter, a notice of an appearance, motion for an extension of time, proposed order granting an extension of time).
  • billing separately to read a short two-line e-mail from opposing counsel accepting a settlement offer and then forwarding the e-mail with a brief comment to the client and another e-mail with a brief comment to the adjuster.

In each of these examples, it likely took the lawyer less than .1 hour to do all parts of the task. But if the lawyer chips the task and bills for each part of the task, the lawyer can bill .3 hour or more.

To guard against chipping, clients should employ certain anti-chipping measures.  One anti-chipping measure is for litigation and billing guidelines to include a caveat to the prohibition on block billing that warns lawyers that breaking a discrete task down into separate parts for billing purposes is not be permitted.  Another anti-chipping measure is for guidelines to provide that any task that takes less than .1 hour to complete (e.g., read a notice of appearance) should not be billed or billed at “no charge” (N/C). Finally, those who review legal bills need to be alert to legal bills that show some signs of chipping (e.g., an overabundance of .1 and .2 hour entries).

Unfortunately, like with so many other things when it comes to bill review, spotting signs of chipping is not something that e-billing programs can do. This is but one reason why I review legal bills the old fashioned way – I read every word in every entry and do not rely upon an e-billing program to tell me what to cut and what to say.

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Are your litigation and billing guidelines up to date?  Are they compatible with an attorney’s duty under the ABA Model Rules of Prof. Conduct?  If not or you are unsure, please contact me at john.conlon@theCLM.org for an evaluation.

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