As all of my posts to date have been for the benefit of clients of lawyers, I thought it about time to write a post for the benefit of lawyers. And since lawyers like to get paid for their services, what better topic to write about than how to significantly reduce, it not totally avoid, the changes of becoming embroiled in a dispute over your legal bill.
In my CLE seminars on ethical billing practices for attorneys, I give 4 main tips on how to avoid disputes with clients over legal bills. These tips also mirror an attorney’s ethical obligations when it comes to dealing with clients on fee billing.
Tip no.1 is to provide an adequate disclosure up front to the client on how fees and expenses will be billed. Not only is this also a good risk management policy to follow, it also is required by ABA Model RPC 1.5(a)(2). And while the RPC do not require written disclosure (except in certain situations), it is again a good risk management practice to always provide a written disclosure.
Often times what a client is complaining about in a bill is something that was set out in the disclosure and agreed to by the client. However – and this is an important however – this can only work to an attorney’s benefit in a fee bill dispute if the attorney can show that the client “fully understood” what was presented to him in the disclosure or fee agreement. See The ABA Task Force on Lawyer Business Ethics (2010) “Disclosure and Understanding.” Also see Marathon Oil, S.A. v. Morrissey, 982 F.2d 830, 838 (2nd Cir. 1993)(lawyer has burden to establish that fee agreements are “fully known and understood by their clients”).
So if you are trying to slip in some aggressive billing practices, you better have documented that you provided adequate disclosure to the client. And when I say “documented,” I mean that in addition to a written disclosure that you also verbally went over the terms with the client ensure that there were no misunderstandings.
Tip no. 2 to avoiding fee bill disputes is to engage in good billing practices. Now, if you are unsure what good billing practices to follow, I would suggest you read my previous blog posts. But if your time is limited then I would suggest you read my blog piece on what one legal malpractice insurer advised attorneys to do when it came to billing. Suffice it to say, if you bill accordingly to how your legal malpractice insurer says you should bill, you will be more likely to avoid fee bill disputes.
Tip no. 3 to avoiding fee bill disputes is always, always, always, read your pre-bills to eliminate any errors or remove or reduce excessive or inappropriate charges. Courts call this exercising “billing judgment.” See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). In fee bill disputes, attorneys must provide evidence that they exercised billing judgment in the disputed fee bills. See, e.g., 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.”).
While going over your bills before they are sent out may seem like a no-brainer, you would be surprised at the number of careless errors I see each month in legal bills I review. These errors include double entries, misspellings, and hard to understand jargon and abbreviations. Perhaps the most careless error observed is insufficiently explained entries such as billing for “research – 2 hours” but failing to state what was researched.
As I have told attorneys in past seminars, your client may not read the 50 page brief that you sweated bullets over and is error free, but they will read your legal bills! And if your legal bills have errors or are hard to understand or fail to properly state what it was you did, then clients are more likely out of frustration to turn to someone (like me) who can help them understand the legal bills.
Tip no. 4 is when you send out a (hopefully, error free) legal bill to a new client, do not just put the standard phrase “if you have any questions on my bill, please let me know,” in your cover letter, but also schedule a time to call the client up (at no charge) and go over the bill with the client. This is perhaps the most important piece of advice I can give. You may think the bill is error free and is clear as clear can be, but does the client think so? And how would you possibly know for sure if you do not ask the client?
Having this conversation with the client will help you know if you need to provide additional or different information in future bills. It will also demonstrate that you are adequately discharging your ethical duty to provide detail in your bills “in such specificity as the client requests.” The ABA Lawyer Task Force on Lawyer Business Ethics, (1996). Also see ABA Formal Op. 93-370 (1993) 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”).
So, there you have it. Just follow these 4 simple tips and you will significantly reduce, if not totally eliminate, your chances of becoming embroiled in a fee bill dispute with a client. Plus you will have the added satisfaction of knowing that you are putting me and the entire legal bill audit industry out of business!