Year End Legal Bills Should be Even More Closely Scrutinized as Lawyers & Paralegals Scramble to Meet Yearly Billing Targets

[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.

You see a lot depends upon meeting law firm billing targets including firm bonuses and partners’ shares of the profits.  It sometimes may also mean whether or not you will have a job for the next year.   This was the situation apparently facing a Denver attorney that I recently blogged about. Afraid that she would  not make her yearly billing targets, she inflated some of her year end time sheets and lied about it when caught. The result was a 9 month suspension for the lawyer.

The pressures to make bonus or even keep your job are real. Thus, it is no wonder that more make-work projects and task padding occurs during the final two months of a year that at any other time in the year.

But apart from concerns about the make-work projects and even making up tasks that invariably go on in the fourth quarter, there is something else that goes on in the fourth quarter: time padding.  Time padding occurs when lawyers and paralegals add time to legitimate tasks to try to make yearly billing goals.

Apart from the deliberate instances of time padding, time padding can also occur inadvertently when lawyers go back through all their files toward the end of the year looking to see if they recorded their time for tasks that might have been completed months ago.  In fact, I have reviewed bills in which the lawyer had included time for tasks from over a year ago.

When lawyers and paralegals do this, it is called “reconstructing” their time. And  when lawyers and paralegals do try to reconstruct their time, they invariably rely upon a faulty memory which, in turn, invariably leads more often than not to recording more time rather than less time.

But don’t take just my word for this. Prof. William Ross, considered the leading academic authority on attorney fee billing issues, believes that,“[a]lthough some attorneys lose money by forgetting to bill for various tasks that they performed, it is perhaps more common for attorneys to overestimate their time.” Wm. Ross, The Honest Hour – The Ethics of Time Based Billing (Carolina Press 1997) at p. 63.

Courts are also skeptical of the vagaries of reconstructed time. See Ramos v. Lamm, 713 F.2d 546, 553 n.2 (10th Cir. 1983)(“[R]econstructed records generally represent an overstatement or understatement of time actually expended . . . lawyers who remember spending the entire day working on a case are likely to overstate the hours worked by forgetting interruptions and intrustions unrelated to the case.”).

To limit the billing errors invariably caused by reconstructing time, billing guidelines should specify a maximum time limit in which the lawyer may bill for services.

_______________________________________________

Why not start the new year off right with a review of your present billing guidelines by someone who has assisted corporations and insurers with updating or drafting their billing guidelines.  For more information, email John Conlon at jconlon@legalpointsllc.com.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s