Legal Malpractice Insurer Advice To Lawyers: Engage in “Good Billing Practices” & Avoid “Billing Mistakes”

February 15, 2018

Recently, I made a stab at getting caught up on my reading. Included in my pile of reading material from the past several months was the Fall 2017 newsletter from the Lawyers Mutual Insurance Company of Kentucky (LMICK). As a proud, long time member of the Kentucky Bar Association, I am on LMICK’s  mailing list.

The reason I had put the LMICK newsletter aside to read when I had time was that I noted that several pages were devoted to legal billing issues. Coming at it from a “risk management” prospective, the newsletter admonished attorneys to engage in “good billing practices” and “avoid common billing mistakes.”

Here are some of what LMICK listed as “billing mistakes” along with their side comments:

  • The bill is as big as the client’s file – looks like over-practicing the matter.
  • Secret identities – no names and no billing rates for the work done.
  • Over-qualified personnel for the work or conversely charging lawyer rates for administrative work.
  • Too many meetings, telephone calls, and research hours – looks like over-practicing the matter.
  • Billing for several lawyers reviewing or preparing to discuss the file – looks like over-practicing the matter.
  • Billing for several lawyers attending a meeting when one would have been adequate – looks like over-practicing the matter.
  • Itemized bills with generic terms such as “phone call” or “meeting” with no substantive information.
  • All telephone calls take exactly .2 hour; all dollar amounts are nice round number or end in five.

Welcome to  my world, LMICK.

The LMICK “common billing mistakes” are the same ones I see all the time in legal bills. However, I find that when I confront lawyers with any of these or other “common billing mistakes,” many lawyers will claim that they see nothing wrong with billing the way they are billing.  When this happens in the future, I think I will tell that lawyer to not just take my word for it, but to check with the firm’s malpractice insurer on the point and let me know what the insurer says.

In fact, as I am such a nice guy, if the lawyer will give me the name of the firm’s malpractice insurer, I will do it for the lawyer.  I will be doing both the lawyer and the firm’s insurer a favor. For having worked with malpractice insurers, I know that they would appreciate having information on any of their insured lawyers who do not engage in “good billing practices” and are oblivious to “common billing mistakes.”

__________________________________________________________

If you have anything from a question on a single legal billing issue to the need for an expert opinion on the reasonableness of a set of large legal bills, please feel free to contact me at jconlon@legalpointsllc.com.

Advertisements

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

January 16, 2018

[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. Read the rest of this entry »


The Consequences for Attorneys Who “Knowingly” or “Negligently” Engage in Improper Billing

December 13, 2017

[Editor’s note: this is another in a series of blog posts addressing specific ABA Model Rules of Prof. Conduct (RPC) that impact how lawyers can and cannot bill clients.]

In my last blog post, I discussed the case of People v. Mary Jaclyn Cook, 17 PDJ 051(Colo. August 10, 2017) in which a lawyer got suspended from the practice of law for just preparing to send out legal bills with false billing entries and then initially lying about it to her supervisors. The case opinion noted that the lawyer had violated several of the RPC.

Before continuing with my series of posts on how the RPC impact how lawyers can and cannot bill clients, I thought that in light of the Cook   case it might be good to pause and discuss the consequences to attorneys for violating the RPC when it comes to billing for fees and costs.

But before discussing consequences, let’s discuss a misconception of many attorneys that the RPC only apply to how they bill their clients. No less an authority than the U.S. Supreme Court has held that ethics in fee billing apply not only in situations involving the client, but also in situations involving the client’s adversary. See Hensley v. Eckerhart, 461 U.S. 424 (1983)(“Hours that are not properly billed to one’s client also are not properly billed to one’s adversary.” citing Copeland v. Marshall, 205 U. S. App. D. C. 390, 401, 641 F. 2d 880, 891 (1980) (en banc) (emphasis in original).). Read the rest of this entry »


Lawyer Who Prepared Legal Bills With Fake Hours Loses Job & Is Suspended From Practice of Law

October 11, 2017

[Editor’s note: this is another in a series of blog posts addressing specific ABA Model Rules of Prof. Conduct (RPC) that impact how lawyers can and cannot bill clients.]

In my previous blog post, I covered RPC 1.4 Communications. This is the RPC governing how lawyers communicate their fees and costs through their billing statements to clients.

Normally lawyers run afoul of RPC 1.4 (and other RPCs) by sending out legal bills with false billing entries. But as is illustrated in the case of People v. Mary Jaclyn Cook, 17 PDJ 051(Colo. August 10, 2017), lawyers also can get into trouble for just preparing to send out legal bills with false billing entries.

The facts as reported in the Cook case are that attorney Cook returned from a two-week honeymoon in late 2016 and discovered that she would be unable to meet her firm’s minimum hourly billing “expectation” for the year. Thereupon Cook decided the way to meet her firm’s annual billing expectation was to pad her year end bills with fake time which totaled almost $40,000 in time that she did not work.

When confronted by her supervising partners, attorney Cook initially maintained that the billing entries were legitimate. Later that same day she confessed that she had fabricated and inflated time entries.

Unfortunately for attorney Cook, her decision wound up not only costing her a job, but also a nine month suspension from the practice of law for violating the RPC. Read the rest of this entry »


How ABA Model Rule 1.4 on Communication Impacts How Lawyers Can Bill For Their Fees and Costs

September 11, 2017

[Editor’s note: this is another in a series of blog posts discussing how specific ABA Model Rules of Prof. Conduct that all lawyers must follow impacts how lawyers can and cannot bill clients.]

Rule 1.4(b) Communication provides that “[a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

In interpreting an attorney’s duty of “communication” pursuant to RPC 1.4, courts have held that an attorney has a mandatory ethical duty to “clearly explain” fees and costs to clients. See, e.g., Board of Prof. Resp., Wyoming State Bar v. Bruce S. Asay, WSB #5-1739, 2016 WY 47 (WY 2016)(court found that attorney violated rule 1.4 by failing to “clearly explain” to client the charges).

Providing a “clear explanation” has been interpreted to mean that each billing entry in a fee bill must be sufficiently explained. See ABA Formal Op. 93-370 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”). Courts deny compensation for billing entries that are not sufficiently explained as they do not provide a basis for determining the reasonableness of the billed for fee or cost. See, e.g., Grievson v. Rochester Psychiatric Center, 2010 WL 3894983 at *8 (W.D.N.Y. 2010)(“Individual entries that include only vague and generic descriptions of the work performed do not provide an adequate basis upon which to evaluate the reasonableness of the time spent.”). Read the rest of this entry »


How ABA Model Rule 1.2 on Client-Lawyer Relationship Impacts What Lawyers Can Charge

July 31, 2017

[Editor’s note: this is another in a series of blog posts discussing how specific ABA Model Prof. Conduct Rules that all lawyers must follow impacts how lawyers can and cannot bill clients.]

In this blog piece, I will discuss how Rule 1.2 Scope of Representation and Allocation of Authority between Client and Lawyer affects how lawyers ethically can bill for their services.

In setting out the allocation of authority between the client and lawyer, Rule 1.2 provides that the big picture items in a representation such as deciding on the “objectives” of the representation including whether to settle or arbitrate or go to trial are the client’s responsibility whereas the details in a representation such as deciding upon the “means” or the steps that need to be taken to carry out the strategy to achieve the objective are the lawyer’s responsibility.

But in deciding upon the steps involved to carry out the objectives of the representation, Rule 1.2 at Comment [2] provides that “lawyers usually defer to the client regarding such questions as the expense to be incurred.”  As a result, lawyers have a duty to discuss the costs of carrying out any proposed strategy with the client and get the client’s consent to the proposed costs.

In an “independent counsel” situation in an insurance context, a lawyer’s statement to a client that the “insurance company will pay my fees and costs” may not be an accurate statement. This would especially be the case if the lawyer has not actually reached an agreement with the insurance company as to the costs of the planned defense. Read the rest of this entry »


How ABA Model Rule 1.1 on Competence Impacts How Lawyers Can Ethically Bill

June 21, 2017

[Editor’s note: this is another in a series of blog posts discussing how specific ABA Model Prof. Conduct Rules that all lawyers must follow impacts how lawyers can and cannot bill clients.]

In this blog piece, I will discuss how Rule 1.1 Competence affects how lawyers ethically can bill clients.

Rule 1.1 specifically states that “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”  What Rule 1.1 means in essence is that when agreeing to take on a representation, a lawyer is impliedly – if not actually – making a representation to the client that the lawyer has the basic “legal knowledge” and “skill” necessary to handle the matter.

While issues related to competency can arise in any type of case, they most often arise in non-routine cases. Knowing as I do that most all lawyers hate to turn down business, lawyers often will say that they are competent to take on a case even though they have not handled that specific type of case before.  But if being fully truthful, what they are really saying is that while they believe that they have the “legal skill” to take on the case, they actually lack the “legal knowledge” on the types of issues involved in the case. Read the rest of this entry »