Honesty in Billing

I recently guest blogged on the Best Practices in Legal Education about lessons I learned in law practice on how to ensure one's bills are not only accurate but helpful to clients.   I had not considered trying to teach students what I had learned until I read about a billing scandal-- one in which the law firm (DL Piper) has denied wrongdoing and received serious criticism for its denials.   For those unfamiliar with the history of the scandal, please see my guest blog -- I cite there web sites that have a history of the events.  The results of the dispute between DL Piper and the client with whom it disputes the allegations in this matter remains to be resolved. Assuming that DL Piper is exonerated completely, however, the damage to lawyers from the negative press has already occurred.

The negative press is unfortunate because most lawyers, including probably most large firm lawyers, are honest in their billing practices.  Even if one chose to assume that large firms are the location of widespread billing improprieties, more than 80% of lawyers do not work in large firms.  See the American Bar Associations' latest study of lawyer demographics at http://www.americanbar.org/content/dam/aba/migrated/marketresearch/PublicDocuments/lawyer_demographics_2011.authcheckdam.pdf  As this study shows, almost half of lawyers in private practice are solo practitioners.  Many others are in public jobs such as prosecutors' offices, public defenders' offices, legal aid offices, in-house counsel to companies, government legal departments.  In large law firms where the billable hour quotas are often at or above 2,000 billable hours per year, the pressures (and temptations) to engage in billing improprieties such as preforming unnecessary work or outright padding of bills, is far greater than in solo practice.  Moreover, the lawyers in public jobs or in legal departments generally do not keep their hours at all, but rather receive a fixed salary.   If you ask your average prosecutor or public defender to figure their "hourly" income by comparing the amount of hours they work by their salary, you'll learn that most of them are overworked and underpaid.  They do their jobs, usually because they want to serve in some way.   But stories about overworked, underpaid lawyers don't often get published in newspapers.

In any event,  I have committed to finding ways to integrate teaching about (1) how to record one's time so as to ensure its accuracy, (2) how to come to an understanding with the client about whether if one spends part of a billing segment (usually lawyers charge in tenth of the hour segments, or six minute increments) whether the time recorded will be rounded up (or down), and (3) how to thoroughly describe one's work in bills to clients so as to better inform the client and maintain solid lawyer-client relations and trust.

In practice, I learned that clients appreciate lawyers who are up front with them about the estimated costs of representation and about what to expect in bills they will receive.    A lawyer should explain details such as how they client will receive bills, how often (e.g., monthly), how to read the bills, etc.  One of the most common client complaints is that bills do not explain sufficiently why a lawyer spent as much time as he or she did on a matter.  As a young associate, I would just put a time period and a cryptic entry in my billing notes (e.g. "telephone call" or "prepare discovery").  I can see now how a client observing an entry "prepare discovery" (and 4.5 hours of time charged) would wonder why that amount of time was necessary.   One friendly client finally told me it would be better if I said "Telephone conversation with [name of other attorney, or client, etc.] regarding [description of topic of conversation]."  Or, instead of "Prepare discovery," I would do well to put "Drafting Interrogatory Answers based on conference with client for client's review; drafting responses to request for production of documents; drafting objections to those interrogatories and requests for production that I deemed objectionable so as to avoid excess cost and expense to client; reviewing documents provided by client to remove any documents that could be withheld under attorney client privilege or work product doctrine and list of documents withheld based on these grounds as required by rules of court."  Although the person preparing my bill complained about this increase in verbiage, my relations with clients improved dramatically once I began more thoroughly explaining my work. .  I also made it a practice to bill on a monthly basis and to inform the client, with the cover letter, of the progress we had been able to make in the case. I invited the client to call if he or she had any questions or concerns.

I already integrate into my civil procedure and civil pretrial practice courses group exercises where  students draft pleadings or develop strategy documents.   I now plan to have students record their time as they perform these exercises.   After the group exercise, I'll ask them to prepare a bill based on the hourly rate I'll assign and the hourly increments (probably one-tenth of an hour increments).  We will discuss whether they will round up time entries (if they spend 15 minutes, that would round up to three tenths of an hour or 18 minutes).  I will stress, though, that they had better discuss with the client at the outset of representation how the billing process will work.  I will also note that it will go a long way toward good client relations to include some  work entries and put "no charge to client" if the task, for instance, took only a few minutes.

Effectively, I will show students how I learned that I should treat a client the way I would want to be treated.  Some may say that such lessons are best left for later when students enter practice.  I disagree.  Even in firms where supervising lawyers take some time to teach new lawyers, these lawyers are busy.  The new lawyer may, like me, have to deal with an unhappy client in order to learn a  lesson.  As far as I'm concerned, one unhappy client is one too many--especially when the unhappiness can be avoided.