“Billing for legal services is as much an art as it is a science,” said the lawyer’s defense attorney. He was trying to explain away ‘the billing errors’ his client made, which led to a criminal complaint for theft by fraud. In reading about the plight of Madison lawyer David G. Stokes last month, I was prompted to revisit the question of billing. When problems arise, some think the subject can be as frightening and supernatural as things that go bump in the night. But it really shouldn’t be.
In Stokes’ case, he is alleged to have made 628 fraudulent billing entries amounting to billings of $27,000 for over 691 hours that he didn’t perform. The Complainant is the State of Wisconsin Public Defender’s Office where Stokes worked as appointed counsel from 2001 to 2006. See Madison lawyer charged for allegedly overbilling Public Defender.
More than padding.
I’d submit that most lawyers know that padding a bill, i.e., billing for time not actually spent working on a client’s file is impermissible. Perhaps a bit more subtle but still cognizable to most lawyers is doing work for three different clients in a single hour and then separately billing each client for an hour.
But what about the following scenario? An inexperienced lawyer takes an hour to find the answer to a client’s problem. But an experienced lawyer takes only five minutes to come up with the same answer to the same problem. Does the experienced lawyer bill the client for an hour or for 1/10th of an hour?
Just because you know doesn’t mean you should.
About 10 years ago, I met a lawyer who’d been practicing more than 20 years. He bragged to me that his long experience and his knowledge justified charging a client for an hour of his time – - – even if the answer only took him a few minutes to develop. His rationale, he explained, was that his life’s experience and expertise acquired over painstaking years of practice was worth something, which he was unwilling to discount. I’m going to guess some if not most lawyers would endorse his point of view, given its sweat-equitable appeal. They’d see nothing ethically impermissible in that situation.
And what about the following scenario? A busy commercial litigation lawyer with long experience handling contract disputes has scores of pleadings and forms at her disposal. The theories and causes of action for breach of contract and all their related permutations are repeatedly reflected in the Complaint forms on her hard drive.
So what does she charge a new commercial litigation client for drafting a Complaint with an analogous fact pattern and similar rights, remedies, and defenses as her other clients? Does she charge the several hours it might take to draft up a fresh-from-scratch Complaint or does she pass on the efficiencies from reusing old work product?
The ethical course to follow.
It comes down to a simple equation. So long as your fee agreement is based on billing for the amount of time expended on a client’s case, it’s ethically impermissible to charge the same amount of time for reusing the same work product or for answering a question you don’t have to research again because you already know the answer.
According to Formal Opinion 93-379 [PDF] Billing for Professional Fees, Disbursements and Other Expenses (1979) the following are also true, “A lawyer who spends four hours of time on behalf of three clients has not earned twelve billable hours. A lawyer who flies for six hours for one client, while working for five hours on behalf of another, has not earned eleven billable hours. A lawyer who is able to reuse old work product has not re-earned the hours previously billed and compensated when the work product was first generated.
“Rather than looking to profit from the fortuity of coincidental scheduling, the desire to get work done rather than watch a movie, or the luck of being asked the identical question twice, the lawyer who has agreed to bill solely on the basis of time spent is obliged to pass the benefits of these economies on to the client. The practice of billing several clients for the same time or work product, since it results in the earning of an unreasonable fee, therefore is contrary to the mandate of the Model Rules. Model Rule 1.5.”