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

[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).).

And for those Cumis or Peppers or independent counsel do not think that the same ethics they must follow when billing clients do not apply or apply differently when they bill insurers, they may want to read Center Foundation v. Chicago Insurance Co., 227 Cal.App. 3d 547, 560 (2nd Dist. 1991)(court holding that Cumis counsel must engage in “… ethical billing practices susceptible to review at a standard stricter than that of the marketplace.”). They may also want to read In Re Jerome Berg, 3 State Bar Ct. Rptr. 725 (Rev. Dept. 1997) (attorney disbarment wherein independent counsel held responsible for unethical billing to insurance companies).

In short, the RPC apply all the time to all situations in which an attorney may bill fees and costs.  Also, nowhere in the  RPC does it say that the rules are different for patent lawyers or real estate lawyers or environmental lawyers. The RPC apply with equal force in all types of billing situations.

And now for the consequences of improper billing.

Whenever I do a seminar for attorneys on ethics, I always tell them that there are three things they should especially avoid doing: drugs, sex with a client, and messing with a client’s money.  I tell them that if they are caught doing one of these three things, they will find that harsher discipline will be imposed on them.

I know harsher discipline is meted out to attorneys who improperly bill from following lawyer disciplinary cases and from reading the ABA Standards of Imposing Lawyer Sanctions. These ABA Standards are what state disciplinary authorities tend to follow when meting out lawyer discipline for violating the RPC. Think of the ABA Standards as being like the Federal sentencing guidelines which Federal judges following when imposing sentences in Federal court.

If you read the ABA Standards, you will see that harsher penalties, such as disbarment or suspension, are called for when an attorney “knowingly” improperly bills a client. See, e.g., In re Disciplinary Proceeding against Vanderbeek, 101P.3d 88 (Wash. 2004)(disbarment for bill padding).

Note that the higher standard of discipline applies not only to how attorneys bill fees, but can also apply to how they bill for expenses. Recall that Clinton pal and former Deputy Attorney General Webster Hubbell was permanently disbarred in Arkansas for overbilling both his clients and his law firm for expenses. Also see In re Mitchell, 2014 WL 1800065, (La., 2014)(attorney permanently disbarred with no opportunity for reinstatement for billing both client and law firm for expenses).

But what if an attorney is only “negligent” in improperly billing a client? Even if the attorney is only negligent, the ABA Standards still provide that discipline in the form of a reprimand or admonition is appropriate.

Although a reprimand sounds like a benign “once and done” type of a discipline, it could have long lasting adverse consequences. This is because public reprimands are reported as cases just like other types of judicial cases.  See, e.g., In Re 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.”).

Since disciplinary cases are reported cases, this means that for years to come,  prospective clients who Google the attorney’s name will discover that the attorney has been disciplined in a case involving legal fee billing. This certainly cannot be good for business. As I tell attorneys in my ethics seminars, “you never want to see an ‘In re’ before your name in a case unless you are dead and the case is about your estate.”

In my next blog piece, I will resume my discussion of the different RPC that affect how attorneys can and cannot bill for fees and expenses.

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Have questions about whether an attorney is engaging in unethical billing practices? If so, contact the only fee bill expert in the U.S. who has served as a state bar Legal Ethics Committee Chair and has qualified in court as an expert on legal ethics and the ABA Model Rules of Professional Conduct.

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