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

[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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