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.

Specifically, attorney Cook was found to have violated RPC 4.1(a)(knowingly making a false statement of material fact to a third party) and RPC 8.4(c)(engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation). Had the legal bills been sent out (or communicated) to the clients, she presumably could have also been found to have violated RPC 1.4 Communications and RPC 1.5 Fees (charging an “unreasonable fee”)

With regard to preparing legal bills to be sent out, I noted in my prior post on RPC 1.4 that lawyers have an ethical duty to read over their legal bills before they are sent out to clients. But this should be done to catch billing errors and not to add false time or add false tasks.

In the Cook case, someone did read over attorney Cook’s legal bills to catch her billing “errors” before they were sent out to clients. As attorney Cook was an associate, presumably the person catching her billing “errors” was a supervising partner.

If attorney Cook’s pre-bills were reviewed by her supervisor, this may have saved that supervisor from a suspension. This is because supervising partners can be held liable for the ethical violations of their associates in certain situations. See RPC 5.1  Responsibilities of Partners, Managers, and Supervisory Lawyers. Morever, a supervisor as well as all attorneys in a firm who have actual knowledge of an attorney’s unethical actions would have an ethical duty to report that attorney to the state’s attorney disciplinary authorities.  See RPC 8.3 Reporting Professional Misconduct.

Unfortunately, what attorney Cook did cannot be viewed as an isolated incident. For over the years I have seen many lawyers (and paralegals) try to get to their target billing goals or try to qualify for a firm bonus by padding their time or padding their tasks. I even had one lawyer tell me of pressure he received toward the end of a year from his firm management to find tasks in his files for other attorneys to do in order to help those other attorneys meet their yearly billing goals.

Because my experience has been that lawyers (and paralegals) tend to pad their bills more in the fourth quarter billing than in any other quarter, I blogged in a prior post about the need to more closely scrutinize fourth quarter legal bills. In that post, I quoted an old saying that “a lawyer’s pen gets heavier during the fourth quarter.” To this I can only add that just like many old sayings, this one has more than a grain of truth to it.

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Have questions about whether an attorney is engaging in unethical billing practices? If so, contact the only fee bill expert in the U.S. who has served as a state bar Legal Ethics Committee Chair and has qualified in court as an expert on legal ethics and the ABA Model Rules of Professional Conduct.

For more information, contact John Conlon at jconlon@legalpointsllc.com.

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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 »


What Clients Should Know About How Attorney Ethical Rules Impact Billing for Legal Fees & Costs

May 4, 2017

If you were to ask a group of lawyers to name an ethical rule that applies to billing for fees, I would suspect at least 90% would name Rule 1.5 Fees – probably because it is the only ethical rule that has the word “fees” in the title!

Now ask those same lawyers to name other ethical rules that may also apply to fee billing and you would probably get mostly puzzled looks. For based upon my own experience in counseling scores of lawyers over the years on ethical issues involved in fee billing, I doubt that 1 in 100 lawyers could correctly name  another ethical rule, let alone several other ethical rules, that might also apply to their billing for fees and costs.

So what are the other attorney ethical rules that apply to billing for fees and costs? Most can be found in ABA Standing Comm. On Ethics and Prof. Resp., Formal Op. 93-379 (1993) “Billing for Professional Fees, Disbursements and Other Costs.” The Opinion discusses the various Rules of Prof. Conduct (RPC) that govern all attorney conduct and may be implicated in legal billing. They include among others, Read the rest of this entry »


A Primer on Increasing Hourly Billing Rates During the Course of a Representation

April 12, 2017

If you recently have had any of your attorneys ask for a 5% increase in their billing rates you might want to refer them to Judge Richard Posner’s recent decision in Prather v. Sun Life . In that case, he found a 5% increase in billing rate to be “excessive!”

Just for kicks, I encourage you to read Judge Posner’s entire opinion in the Prather case. The Judge is well known for his often thought provoking opinions and statements on a wide variety of subjects. He also sometimes has an entertaining tongue-in-cheek way of presenting his opinions and Prather is an example of this.

But back to the subject of increases in billing rates. I often come across this issue in reviewing legal bills in cases or other legal matters which drag on for years. So I thought it time to set out some basic facts on the subject. Read the rest of this entry »


CLM Advisors’ “Snapshot” is Interesting Picture on Use of Third-Party Legal Bill Review Vendors

March 10, 2017

CLM Advisors periodically conducts informal surveys of industry executives to capture how industry executives feel about different litigation and claim strategies. These results of these informal CLM Advisors surveys are compiled into a “snapshot.” Unlike CLM Advisors more formal in-depth “studies,” snapshots are intended to be more informal, point-in-time, “State of the Unions” on particular important aspects of the insurance industry.

With an end view of compiling a snapshot on the state of the use or non-use of third-party legal bill review (LBR) vendors in the insurance industry, CLM Advisors recently surveyed some 125 senior litigation and claims officers. The results of this survey presented an interesting picture on the “State of the Union” on the use of third-party legal bill review vendors in the industry.

But before getting into this Statue of the Union, a brief review of the history of the third-party legal bill review industry may be in order. Read the rest of this entry »