Three Peas in the Same Pod: Minimum Incremental Billing, Task Oriented Billing, and Rounding Up of Time

Minimum Incremental Billing, Task Oriented Billing, and Rounding Up of Time are among the more common billing schemes I run across in my legal bill reviews. While each of these billing schemes is different, they all are related in that they involve adding in more time than an attorney actually works. And billing more time than actually spent on a task is unethical. See ABA Formal Op. 93-379 (1993)(“[a] lawyer may not bill for more time than she actually spends on the matter”).

Minimum incremental billing occurs when any task is billed at a minimum amount of time such as .2 hour. Thus emails, telephone calls, and letters or other tasks that may take .1 hour or less to complete are billed at a minimum of .2 hour.  Minimum incremental billing is pretty easy to spot. It can be shown in legal bills by a lack of tasks that are billed at .1 hour. Of course, an attorney may just be writing off the time taken to complete small tasks which is commendable. However, a close examination of all the tasks billed at .2 hour may lead to the conclusion that small amounts of time are being rounded up rather than written off.

Task oriented billing occurs when certain tasks are billed at a minimum amount of time. It is really just minimum incremental billing applied to tasks. For example, a minimum of .2 hour is billed for any phone call or .5 hour is billed for the preparation of any letter or other document.

Task oriented billing can be fairly easy to spot by looking at the time billed for phone calls and document preparation. For example, if .5 hour is billed for the preparation of simple form documents that should take only a few minutes (at most) to prepare such as a Notice of Deposition or a Notice of Appearance, then task oriented billing is likely occurring. Similarly, if no phone calls or letters are billed at less than .2 hour (or more), then task oriented billing is likely occurring.  See In re Tom Carter Enterprises, Inc., 55 B.R. 548 (Bankr. C.D. Cal. 1985)(“Very few phone calls last more than one-tenth of an hour, and . . . It rarely takes more than one-tenth of an hour to read an incoming letter or write a short letter . . .”)

Rounding up of time is what the term implies. It is adding in more time or rounding up of time for all tasks usually to the next even hour increments such as .4 hour, .6 hour, .8 hour or 1 hour.  It is perhaps the easiest time enhancer to spot as it can be spotted by the prevalence of time being billed in even hour increments.

Rounding up of time time billed also can be spotted by plotting the time entries on a scattergraph. Time entries plotted should appear in a random pattern on the graph. If there are concentrations of time in certain billing increments, this could be a sign of the rounding up of time. This is because an attorney “does not work more often for a half-hour than for 20 or 40 minutes.  Only if there were rounding up would there be a concentration of half or full hour billings.” See Gerald Phillips, Reviewing a Law Firm’s Billing Practices, ABA Prof. Lawyer (Fall 2001). In other words, there should be just as many billing entries for .1 hour as for .2 hour or .3 hour and so on.

Of course, impermissible rounding up of time may not always be the attorney’s fault (except in the failure to proofread bills before being sent out). In some law firms the billing programs are programmed to impermissibly round up time when the timekeeper records time in minutes rather than tenths of an hour.  For example, a task that the timekeeper records as having taken 7 minutes to complete may be rounded up to 0.2 hour rather than rounded down to .1 hour by the law firm’s computerized billing program.

I know that errors in computerized billing programs do occur because I will often divide the number of hours billed by an attorney into the total time billed and get a number that is not the attorney’s hourly rate.  I have also talked to e-billing program vendors who state that their e-billing systems regularly catch between 1% and 2% in law firm “math” errors.

But while these billing schemes as played out often do involve small increments of time, cumulatively they can add up to significant amounts. See William G. Ross, The Honest Hour, Carolina Academic Press, at p. 166 (“the combination of large billing increments and liberal rounding techniques costs clients untold millions of dollars every year”).  Also see Leigh, Schroeder, Wolf, U.S. Business Litigation, p. 16 (Nov. 1997)(“Rounding up can easily inflate a legal bill by 15% to 30%, if not more, depending upon how frequently and to what extent it is used.”).

Unfortunately, my experience is that impermissible billing schemes usually do not occur in isolation. If an attorney is purposefully impermissively rounding up time on small tasks, why would the attorney stop there? If impermissible rounding up is occurring on small increments, you can presume that it is likely  being done in larger time charges.

And even more troubling. If an attorney would lie to a client on a legal bill, what else would the attorney lie to the client about? Is deliberately overbilling a client a symptom of an even greater problem involving trust which should be at the very heart of an attorney-client relationship? Many legal and ethical scholars think that it is. More on this in a future post.

Does your company have litigation and billing guidelines that mirror an attorney’s ethical obligations under the ABA Model Rules of Prof. Conduct?  As the only legal billing auditor in the U.S. who has served as a state bar association Legal Ethics Committee Chair, I truly have a unique insight into legal billing and ethical issues.  This is why I specialize in drafting litigation and billing guidelines that are not in conflict with an attorney’s ethical obligations under the Model Rules. For more information, please contact me at jconlon@legalpointsllc.com