Making the rounds of legal publications last month was a story about an attorney in MA who was suspended for 6 months for overbilling her clients by 450 hours. According to the facts set out in IN RE: DOREEN ZANKOWSKI , the attorney claimed to have worked an incredible 3,893 hours in one year. This included 3,173 billable and 720 non-billable hours.
And according the Opinion, in addition to inflating her own hours, the time billed to clients by associates who worked under her was also inflated. However, there was no word in the Opinion as to what was done with the associates who were aware that their time was being inflated.
In reading the unusually long 42 page Opinion, something strange caught my eye.
Rather than being outraged at being overbilled, some of the attorney’s overbilled clients actually testified on her behalf. Among the supporting clients who testified was one who stated that they were very satisfied with her work and never questioned her bills “since they were so much lower than prior counsel’s.” Another client testifying on the attorney’s behalf stated that he always reviewed the attorney’s bills and had never found anything wrong. (Memo to self: find out who these clients are and contact their CEO’s about the need for fee bill auditing.)
Unfortunately for the attorney, the Hearing Committee of the MA Board of Bar Overseers didn’t credit the testimony of the attorney’s client witnesses. As the Committee noted, most of the fees were being paid by insurers and they therefore inferred that the clients likely “paid scant attention to the bills.” (Memo to self: find out who these insurers are and contact their CEO’s about the need for a fee bill auditing program or an outside audit of their existing fee bill auditing program.)
Initially I thought the attitude by these supporting clients to be a variant of the Stockholm Syndrome. That is, these clients were likely so captivated by the attorney’s good works to the point that they were not only willing to overlook her obvious overbilling, but were also willing to come to her defense to avoid punishment for overbilling them.
But then I realized that is likely that at least some of the individuals who testified on behalf of the unnamed clients were probably General Counsels. As such, they could be generous in that it was not their money, it was someone else’s money. But even where a company’s own money is involved, it has been been my observation and experience over the years that many GCs rarely complain about the size of their company’s legal bills.
The reason that many GCs rarely complain about their legal bills is two-fold. Either they likely “have a personal relationship with outside counsel or because they don’t want it known that they have been overbilled.” Margaret A. Jacob, Overbilling Is Widely Known at Major U.S. Law Firms,WSJ (Sept. 17, 1997). With regard to the latter point, isn’t a good offense always better than a good defense? So much better to pound the table and emphasize the good works that occurred on their watch hoping that this misdirection will turn attention from the bad deeds that also occurred on their watch.
But I don’t want to pick solely on GCs. Over the years, I also have found that many non-attorney clients also will often turn a blind eye to obvious attorney overbilling. Just as some GCs so often do, non-attorney clients often “do not care whether attorneys bill their time ethically if they receive satisfactory services.” Carl Selinger, “Inventing Billable Hours: Contract v. Fairness in Charging Attorney’s Fees,” 22 Hofstra L. Rev. 671 (Spring 1994).
But providing satisfactory services and good works should never be used as reasons to excuse attorneys who pad their bills and bill clients for more time than actually worked. It is wrong as wrong can be and shame on any GC or any non-attorney client who tries to use these reasons as an excuse for looking past an attorney’s ethical lapses in overbilling.
If there is a good actor in this story it is the attorney’s law firm management. For it was the firm, rather than the clients, who filed the disciplinary complaint against the attorney. The firm also made restitution to the overbilled clients as well as separated the firm from the attorney. But at what particular point the firm’s internal mechanisms for identifying overbilling kicked in was not made clear in the Opinion.
Surely billing over 3,000 hours a year should raise a red flag at any law firm. But should the flag be raised for lesser amounts of billable hours? At least one very influential leader in the legal profession once stated that billing over 2,000 a year should be a cause for concern. See William H. Renquist, Dedicatory Address: The Legal Profession Today, 62 Ind. L. J. 151, 155 (1987)(“If one is expected to bill more than two thousand hours per year, there are bound to be temptations to exaggerate the hours actually put in.”).
Of course, a client can protect itself from overbilling attorneys by setting up a robust legal bill review program. But that will invariably identify the overbilling after the fact. To deal with the issue before the fact, clients should quiz their law firms on what mechanisms they employ to detect overbilling and at what point do these mechanisms kick in. Law firms that do not have a defined mechanism to spot overbilling or set the point too high at which the mechanism kicks in should be avoided.
Finally, a word to lawyers about the long term effects of overbilling your clients. Remember that your name can live forever on the Internet. If you Google this attorney’s name, the listed results on her overbilling take up an entire page. Many of these will drop off with time, but not all of them. So if you have been caught overbilling, prospective clients will likely find this out well into the future if they Google your name.
Also, a six months suspension without automatic reinstatement can sometimes mean that the actual down time is much longer. In some states, the process for reinstatement can take a year or longer. And a suspension means just that and nothing else. It cannot be termed as a sabbatical or an extended vacation. An attorney can be subject to further discipline by not stating the real reason for an extended absence from practice. See, e.g., In re Sniadecki, 924 N.E.2d 109 (Ind. 2010)(attorney disciplined for telling clients he was just “stepping away from my practice for six months” rather than saying he had been suspended for 6 months).
The overall takeaways from IN RE: DOREEN ZANKOWSKI are these. Lawyers have an ethical duty to truthfully bill their clients and law firms have an ethical duty to set up mechanisms to ensure that this is happening. Clients can help in this effort in many ways including setting up a robust bill review program that can spot overbilling early on before it gets to the point of becoming a real ethical issue for a lawyer. But one way that is definitely not helpful is for clients to offer lame excuses for the lawyer’s unethical overbilling.