Overbilling Lawyer Gets Support From Her Overbilled Clients

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 unusual 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.

Googling To Find Out If Your Attorney Uses Form Documents

In a prior blog post entitled “The ‘Does Anyone Have A Form That I Could Use’ Practice Section,” I poked gentle fun at a state bar practice section I belong to because most of the posts on the section listserve were from attorneys asking other attorneys if anyone had a particular form document that the inquiring attorney could use. Due to the volume of such requests, I had found it both amusing as well as telling that an awful lot of what attorneys do in most any practice area has to do with using forms.

And it seems that you no longer have to ask a fellow attorney for a form. You can just Google the name of a Motion or other type of legal document and you often will find a form. I have done this countless number times when reviewing legal bills from attorneys throughout the U.S.

Recently I had occasion to look up a Notice of Motion and Motion to Compel Testimony and Production of Documents in California. I suspected that the document the attorney billed 2 hours to prepare was a form document. So I Googled it, and sure enough I was taken to a form document. This form document not only had the basic form Notice and Motion, but it also had the argument for the attorney to use in support of the Motion including the supporting case authority. Comparing the attorney’s Motion with the form Motion, I could see that 90% of what was in the attorney’s Motion was in the form Motion. And the 10% the attorney had added did not take 2 hours. Continue reading

E-billing “Rules Engines:” They Work All of the Time Some of the Time

I’m going to write about something that many attorneys whose clients require them to submit their legal bills through e-billing programs already know. E-billing rules engines supposedly programmed to automatically spot and take deductions in legal invoices for violations of a company’s billing guidelines often do not work as advertised.

And when I say e-billing rules engines do not often work “as advertised,” I am talking about how e-billing companies promote the use of their rules engines.  As one e-billing company puts it on their website, “[Name of rules engine] automatically reviews, validates, flags, and adjusts line-item invoice charges to comply with billing guidelines.”

Wow! No human involvement needed. Just push a few buttons and sit back and reap the savings. Sounds incredible doesn’t it? Continue reading

The Lowdown on How To Discuss Fee Bill Issues With Your Lawyer

While most all of my blog posts have been directed to the corporate world and to lawyers, I thought it about time to write something for those individuals who have incurred large legal bills. For, in addition to doing fee bill reviews for corporations and governmental entities, I also do fee bill reviews for individuals.

Legal fees that individuals incur are usually much more modest than those incurred by large corporations. Nevertheless, I have reviewed legal bills for individuals who have incurred in excess of $1 Million in legal fees for probate and estate matters, real property disputes, business deals gone bad and yes, even for divorces. Continue reading

Sharing Comparative Data on Law Firm Compliance With Company Billing Guidelines

Once upon a time (or about 25 years ago), insurers began to use electronic bill review software to audit their attorneys’ compliance with their billing guidelines. In addition, many insurers established dedicated legal bill review units or used outside legal bill review vendors to audit legal bills.

As audited legal bills started coming back with deductions for numerous violation of insurer litigation and billing guidelines, a positive thing occurred. Attorneys actually began to read their clients’ billing guidelines. And what they found was numerous variations of essentially the same billing rules as well as many vaguely defined guidelines and rules. Continue reading