In the Tom Cruise film, The Firm, a newly hired lawyer was asked to overcharge his clients by billing during lunch, whilst in the shower, etc.
Does this practice take place? Is it routine? How does the client stop this from happening to them? Can you demand to cap the legal fees to some reasonable value before you hire them?
If you are overcharged, isn’t it your word against theirs? I’d hate to get into a lawsuit with my own lawyer over the bill.
In general, no, it doesn’t. But there are firms that skirt the issue; I worked, briefly, for one, and didn’t like it. They didn’t like when I left and started letting some of their clients know just how they billed certain appearances.
As an example, if the attorney went to the Appeals Board to cover three hearings, all of which took place simultaneously (common practice), you still billed each client (we’re talking insurers, not that it matters) a minimum of one hour for the “appearance.” Hell, you could have gotten done with all of them in 30 min., and the firm was richer by 3 hours of billed time.
Reputable firms (note the stress) don’t do such things; clients invariably figure it out and you lose business fast. Besides, as in my case, there is this little thing called a moral conscience. :rolleyes:
Yes. It is less common today though, especially with business clients.
No.
Review the bill carefully. Call your lawyer if any time entries seem inappropriate (too much time, too many lawyers working on a matter, lawyers that you have never heard of appearing on your bill).
You can demand anything your heart desires. Whether a lawyer will agree to a fee cap depends on multiple factors. Obviously you can’t force them to agree. But there are lots of alternative schemes besides hourly billing.
Yes. But they will have the burden of proof and judges routinely cut attorneys’ fees, especially in cases where the other side is ordered to pay them.
Many lawyers will not sue over fees because they fear malpractice counterclaims. If they do sue, they will sometimes wait a few years, until the statute of limitations runs on malpractice claims.
On preview, I agree with **DSYoungEsq. **
In fact, today, I’d say the opposite is more common.
For instance, I represented a huge company (you’d recognize the name) on some of their claims for auto accidents. They were self-insured and had a department devoted to managing these claims. They sent my firm a 20 page set of rules about what they would pay for and what they would not. It included:
Don’t fax us anything (at the time most lawyers charged faxes at a significant premium–it was like faxing from Kinko’s)
No conferences. (Another source of high fees. Got a question that tangentially involves a tax issue? Go talk to the senior partner in the tax department. He probably doesn’t know the answer because he only does corporate tax, but you can both bill the time, and if you do it over lunch, you can try to bill the lunch to the client, too). Which brings us to the next item.
No meals.
If you need to travel somewhere, we buy the ticket.
We approve all discovery and all correspondence that requires research.
We approve all motions, no matter how routine.
No research. (Yes, it was actually in there).
This client was also billed at a lower rate than most other clients (which, from the perspective of somebody at a big firm, really sucks).
This practice does exist. Even at “reputable” firms. (I disagree strongly with DSYoungEsq on that point.)
Lawyers (especially young associates in large firms) are under enormous pressure to bill a lot of hours. They generally are given a minimum number of “billable hours” they are expected to post each year. Many large firms encourage competition among their young lawyers by publishing (within the firm) the hours billed by each associate. Associates who lag are the ones who get shown the door. The implication is clear: bill a lot of hours or not only will you never make partner, you’ll be gone.
In that environment, the temptation is very strong to “stretch” your hours. Not by billing shower time, though. More common would be billing a client hours of time for drafting a document even though it’s essentially a form that takes only a few moments to edit and print.
Stopping the practice is very difficult, if not impossible, because it’s so hard to prove. How do you prove someone didn’t spend time on your case? The only way I’ve seen that successfully done is when lawyers go so far as to bill impossible numbers of hours. I recall an example that was featured in “News of the Weird” some years back where a lawyer was nailed because his records showed him billing clients (taken all together) something like 160 hours per week.
As you suggest, the fear of a malpractice counterclaim only delays lawsuits to recover legal bills; it doesn’t stop them. The statute of limitations on legal malpractice is only a year or two in most jurisdictions, while the statute of limitation on contractual debt tends to be four or or six years. All a law firm has to do is wait a year or two before filing suit to avoid the malpractice counterclaim.
I would agree with Gfactor that the best way to prevent being overbilled is to review your bills carefully. Call your lawyer after you get a bill and ask specific questions. Doing this makes the lawyer realize that you have an eye on him/her.
I should point out that “bill padding” is hardly limited to the legal profession. Find me a profession that does not engage in this sort of thing in one form or another.
It’s worth noting that, for young associates, time that they bill is routinely written off by the partner who sends the bill to the client. That is, if Joe Bloggs, Esq., is a fresh young attorney and he spends 9 hours in the library spinning his wheels, his managing partner is VERY unlikely to bill 9 full hours. As to how far it gets written off, not a clue. (After all, I’m not practicing yet.)
At least, that’s what I’m hearing a lot of.
For certain routine things you may be able to get a set price, or at least an estimate. That’s how it worked when we had our trust set up.
Not necessarily. Even after the statute has run, in many jurisdictions, a counterclaim may be asserted to the extent of the plaintiff’s claim. E.g., http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-600-5823
While a firm that is subject to a counterclaim in this context might not tender the defense to its insurer, it will probably have to disclose the claim on a renewal application.
One of the worst parts of big firm practice. This happens big time when the partner wants to do a favor for a friend. The young associate gets called into a senior partner’s office. Does the work. Bills the hours. And then the hours get cut, and the associate winds up short of target. Obviously, the other partners might not approve of such tactics, but I’ve seen it happen. Similarly, if the client calls to complain about fees, the associate’s time will get cut before the partner’s even though the partner’s time might be twice as expensive to the client. I once won a case for a major brokerage firm. The VP who was our client contact was upset because he didn’t like my brief, the one that won the case. So he called to complain, and my time was written way down on it. The worst part was that I spent a ton of time researching and writing arguments that the VP had suggested. I came up with a much better argument that won the case. And I had to work a bunch of extra hours to cover the lost billables from the cut, even though I won the case.
After you have been at the firm for a few years, it is much more difficult for partners to do this, and they will usually at least run their cuts by you before submitting them. As soon as I developed some partner allies, for instance, I would ask them to intervene if I got an assignment from one of the partners who liked to cut. Something like, “Hey, I’d love to help you with this trial, but Tom wants me to handle his brother-in-law’s drunk driving case. It’s a shame, too, because we probably won’t even get paid for that work,” was very effective in throwing the dead cat into somebody else’s back yard. Usually I’d get a call within an hour telling me that drunk driving thing had been reassigned.
It happens, but I don’t know how routine it is.
One method is “double billing” where the attorney does one thing that simultaneously benefits multiple clients but bills each client full time for that thing, as DSYoungEsq mentioned. This usually involves travel. If I fly from one city to another to work on three cases in the other city, I can’t bill each client for the full cost or time of the flight. I have to split the cost & time 3 ways.
Another method is “value billing” where an attorney will bill a client for what the work is “worth” as opposed to the amount of time actually spent working. For example, let’s say I wrote a legal brief and it took me 8 hours. I bill 8 hours. If a similar case comes up in the future, I may be able to simply tweak the brief I wrote in the first case and use it in the new case. Let’s say I spent 1 hour tweaking the old brief to fit into the new case. I can only bill 1 hour for that, but some attorneys will bill the full 8 hours for the second brief as if they had created it from scratch.
Another method is simple “padding” where the attorney tacks small amounts of extra amount of time on the end of each item. Instead of billing 0.1 hours for that short letter, you get a bill for 0.2 hours. Small enough not to notice or make a fuss on a single entry, but it adds up.
Another trick is billing for work the attorney doesn’t do. Maybe the attorney has an experienced legal assistant or paralegal who can perform simpler legal tasks and write simple letters and such. The attorney may simply take 0.1 hours to review the work performed by the assistant, but will bill for the full amount of time it would have taken as if the attorney did the work himself.
I’ve worked with attorneys who did all this stuff. The gossip mill in one firm said that one attorney managed to bill over 24 hours in one day. The time was spread out over multiple cases, so no individual client would know the difference.
I worked for another firm where one of the partners left the firm in part because of unscrupulous billing practices. He accused the senior partner of intentionally “torpedo-ing” settlement discussions by being as unreasonable ass when negotiating. Of course, the cases didn’t settle, but the partner would go back to the client and explain how unreasonable everyone else was and how reasonable he was. Of course, if a case settles early, the firm loses a paying client. If the case doesn’t settle, that means the firm can keep billing the client.
Anyway, I am a solo practitioner now, and my own boss… so I don’t have to deal with that BS anymore.
As mentioned, the best way to avoid these problems is to review the bill carefully, question items on the bill that seem weird or inflated. However, unless you are knowledgeable in how long it takes to actually do stuff, this may be difficult. The rule in these parts is that the attorney doesn’t bill for “administrative” time such as making photocopies or preparing or discussing your bill. The attorney can charge for the cost of photocopies in terms of paper and toner and wear-and-tear on the machine, but not the time it takes to make a copy or send a fax, etc. So if the attorney drafts a simple one-page letter and bills you more than .02 hours for it, that’s a tip-off that your bill is being padded.
Also, on preview, billing reasonable amounts for reasearch is normal. Attorneys can’t possibly have every statute and case in their heads at all times. The question I usually ask on research is, “Is this a routine question that a more experienced attorney would know instantly?” If the answer is “yes” then I spend the time, but I don’t bill for it.
Also on preview, young attorneys in firms are under tremendous pressure to bill their whole lives away at work. So, they are more likely to bill for every little thing, pad their hours, etc. The partner should cut the associate time down to a reasonable amount. However, the firm should not bill a client for the young attorney to learn things that more experienced attorneys already know. In other words, a firm should not bill a client for on-the-job training of its associates.
That should be 0.2 hours, not .02 hours.
I worked for a partner who would ask me to write a brief. I wrote a good brief. Then the partner would then edit the brief. He would take two sentences and combine them into a single sentence with a comma. He would take a single sentence with a comma and split it into two sentences. He would change simple words that had no effect on the substance. For example, he would change a sentence that said, “three kinds of widgets” to say, “three types of widgets.” All stylistic changes, but no substantive changes.
Then, he would tell me that he had to re-write the whole damn thing and take all of my billable hours for himself. He had a reputation amoung associates as a “time theif.”
If you are a young associate, try to stay away from firms that only give you credit for hours billed out to clients and no credit for hours you actually work.
Another unethical billing practice is called raking. That’s when the billing partner bills for work that he or she plans to do, but has not yet done. This usually happens at the end of a quarter or year. Compensation is based, to a large extent, on hours billed. So if a partner needs a few more billables in order to make a respectable showing, the partner might just put down 40 hours for some complex pension plan that the partner plans to work on. The partner might know, for instance, that the entire project will take 100 hours or more, so when the work actually gets done, the partner will reduce the hours billed by the 40 hours. This can get very embarrassing when the client decides to change law firms. All of the sudden the file goes to the new firm, but there is no work product from the claimed 40 hours.
:smack: My legal writing is better than my SDMB writing, BTW.
One thing about lawyer fees. From the client perspective, it makes more sense to think of cost in terms of the desirableness of outcome. I’d rather pay a lawyer that padded the bill 50% and won than a lawyer that billed to the eactly correct minute but lost. IOW it isn’t the cost of the lawyer fees, but instead who gives the most value. As such, if looking for a lawyer better to look for the one with the best “batting average” than the cheapest. Same with real baseball. A cheap error prone first baseman with a .202 batting average is a worse deal than high paid star with almost no errors that hits .350.
I know that guy!!! 
This might be tough to do. Firms rely on partners to supervise associates’ work habits and billing practices. One thing that they look at when they review associates is hours booked versud hours bills. This statistic shows how much of the associate’s time was cut. If the number is large, the associate will appear inefficient. Few firms will question a partner’s cuts unless the partner is really abusing the system.
There was a lot of talk about this in the industry about ten years ago. Many firms were moving away from straight hourly billing in order to create incentives for good work. So they would, for a big client, negotiate a lower hourly rate, but have a premium if the result met certain standards. One of the problems with this approach is that many clients are broke these days, or will go broke before the case is over. They can run up a tab, pay a portion of that, and then not pay the premium. Even if the amount owed is enormous, the firm will probably wait a few years before pursuing it. The discount for the probability that the premium won’t be collected eats up most of the value of the discount in many cases.
The lawyer who handled my 2nd divorce really boned me on faxing, copying, and postal fees. She’d also bill me .25 hours for writing FYI on documents and forwarding them to me.
Some firms pay little or no attention to associate time written-off, they just look at how many hours were billed out. So, if a new associate books 160 hours in a month, but the firm only bills out 120, then the associate only gets credit for 120 and no recognition whatsoever for the extra 40 hours worked but not billed.
Some firms want associates to book so many hours a month, knowing that some time will be written off as inefficiency. They keep an eye on how many hours are actually billed to ensure reasonable efficiency, but they at least acknowledge the hours booked and count them toward a billing target. Other firms don’t care about how many hours you book.
So, in an interview, if a firm says we want you to “bill” 160 hours per month, be sure to ask whether that means 160 booked or 160 actually billed out to clients. The difference can be huge to a young associate.
Insist on a fee agreement that specifies the minimum billing increment is 0.1 hours per task, not 0.25 hours.
It seemed as if ours did. They wrote a contract and routinely placed “she/her” in places referring to my male business partner. His last name was Wenklar and they referred to him as Henry (The Fonz.) We made one error by using the diminutive of his first name. We asked that all this stuff be fixed and they charged us 125 dollars. 125 dollars to fix numerous errors of theirs and one of ours - and of course this was a simple typing exercize. No expertise was required - just call a man by he/him and get his real name on the contract. I was pretty hot and will never use that firm again.