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Bill Padding? Why Fairness is More Important than “Ethics”?

August 2, 2012

I came across an interesting article on Stephen Bainbridge’s blog:  “Bill Padding: What’s Cheating and What’s Okay?

Client’s may be surprised to learn that lawyers and their respective State Bar Associations have very different views of what may or may not be unethical practices.  Smart clients don’t get caught up in lawyers policing themselves, but instead design their own billing guidelines, attorney-client retainer agreements, and allowed billing practices.

Professor Bainbridge identifies 2 areas that he suggests are clearly unethical bill padding:

  • Charging time not actually spent working on the case (pure billing fraud)
  • Double billing

While these two areas are clearly unethical, without close monitoring of the attorney, they are very difficult to prove.

Other areas he finds “arguably more unsavory than unethical” are:

  • “But for” billing:  e.g., billing the client from the moment the attorney wakes up to catch a flight for a hearing and not stopping the clock until the attorney falls asleep at night.
  • Strategic phone/email practices:  e.g., individually billing each phone message listened to,  phone message left and email read by the attorney’s minimum billing increment.  With quarter hour intervals, an attorney can get a full day in from less than an hour of this “practice”.  Even at 0.1 increments, this can add up fast.
  • Recycling memos:  Reusing work done from a prior client for the current client, i.e., using research and a memo that took 100 hours for  Client A and billing Client B the same 100 hours even though the attorney only spent 5 hours on it for Client B.  The ABA actually considers this unethical unless disclosed to the client.
  • Billing time for billing
  • Not stopping the clock when taking a coffee or restroom break

From the smart client’s perspective, I’d be less concerned with the slippery slope of the “ethics” of any given practice and care more about common sense and value. Let’s look at a couple of examples.

First, defending a deposition.  Let’s say the official start time is 10:00 a.m. and the end time is 5:30 p.m., with a 1 hour lunch.  Total actual depo time is 6.5 hours.  Let’s also assume the depo requires 30 minutes of travel time each way.  What is a fair billing for this scenario?  As a client, I’d want to see a bill something like this:

  • Travel to deposition –  0.5 (at an agreed to lower travel rate)
  • Defend deposition of Mr. Bigwig – 7.5 (at regular attorney rate)
  • Travel from deposition – 0.5 (lower rate)

I don’t want to “nickel and dime” the attorney in this situation.  Whether he was discussing or thinking about the deposition at lunch (and technically not working on the case), the attorney is fully engaged on your case.  I don’t even care if he “double bills” during lunch – making and receiving a call or two on another case and billing it to that client.  I’m also going to allow reasonable travel time (albeit at a lower rate).  This seems like fair billing to me.  Unfortunately, under “but for” billing and good old-fashion billing inflation, many clients are more likely to see:

  • Travel to and from deposition, defend deposition of Mr. Bigwig, check phone messages, review email – 11.0 (all at the full attorney rate)

Second, let’s look at the “recycled memo” scenario.  As a smart and fair client, I would allow my attorney to bill the fair value of such legal work – which of course takes trust, communication, and billing judgment.  It seems unrealistic and unfair to expect the second client to only be billed 5 hours for a 100 hours worth of work.  It seems more fair to determine the value of the work – using billing judgment and common sense – and allowing this amount to be billed regardless of actual time spent.  This type of pricing arrangement between the client and attorney will ultimately lead to a much better mutually-beneficial relationship.

I’m very interested in others’ viewpoints on this – both for and against – so please feel free to comment either publicly or privately.

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2 Comments leave one →
  1. August 3, 2012 1:22 pm

    How about you offer them a fixed price upfront so they can agree or disagree with the price beforehand?

    • August 8, 2012 5:42 am

      Fixed pricing is more problematic in a litigation setting than transactional. For a “recycled memo” or a will – fixed pricing works well. In litigation, many factors, including the length and number of depositions, are unknown and can be out of the control of the parties. Open and real communication is key – many clients have no idea about the true cost of an 8-hour deposition, which includes the actual deposition, depo preparation and court reporter fees.

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