A recent article by Karen E. Rubin of Thompson Hine LLP in Cleveland, “Law Firm’s ‘Block Billing’ Helped Obscure Overcharges, Plaintiffs Allege in TX Federal Suit,” reports on the ethics of block billing in a federal action in Texas. This article was posted with permission. The article reads:
Five businesses filed suit earlier this month in a Texas federal district court against Morrison & Foerster, a 1,000+-lawyer mega-firm headquartered in San Francisco. The case is unremarkable in most ways: on the one hand, former clients who assert wrongdoing in how the law firm handled their matters (including billing improprieties) and a less–than-desirable outcome – and on the other hand, a law firm that says “Don’t believe everything you read in a complaint, the claims are baseless and we will win.” (MoFo told the ABA Journal last week that “[t]he complaint has no merit” and that the firm “will be vindicated.”)
What is noteworthy is one of the allegations about the firm’s billing. The plaintiffs claim that the firm’s misdeeds include “block billing.” By grouping multiple tasks in a single time entry, the plaintiffs allege in the complaint, Morrison & Foerster made it “impossible to determine exactly what tasks were performed and the amount of time allegedly spent for such tasks.”
Ye olde one-line fee bills
At this early stage, the allegations in the complaint remain unproven, and it can’t be known to what extent MoFo may (or may not) have sent invoices that block-billed discrete tasks. Certainly, in days of yore it was common for law firms to send invoices summarizing the services provided. (It was also common to see fee bills with one line: “For services rendered…” and then the dollar amount.) In the 1980s, say, it was certainly easier to dictate a summary of the work done on a matter than it was to break out specific tasks. (Those of us who were young and tech savvy in those bygone days would use our fancy Dictaphones™, though the senior partners would have their secretaries take dictation on a steno pad.)
Today though, most of us put our daily time charges directly into software that will spit out a list of charges for the month. Preparing a “summary” of those charges actually requires more work than giving the client a detailed description of how much time was spent daily on what and by whom. Why ever spend the time summarizing?
But what the plaintiffs in the case against MoFo might be alluding to is the practice of stringing together many short tasks in one running description and assigning a single combined time charge to those discrete tasks. That can effectively obscure how much time the lawyer spent on each of those tasks – which is something clients now expect to be informed of.
Billing rules of the road
There is no ethics rule that says you may not “block bill” (though many corporate clients today have outside counsel guidelines that prohibit the practice). But several ethics rules are broadly relevant, including your jurisdiction’s version of Model Rule 1.4(a)(3) (keeping the client reasonably informed about the matter); Model Rule 1.5(b) (communicating the basis of the fees and expenses); and Model Rule 1.5(a) (not charging an unreasonable fee).
ABA Ethic Opinion 93-79 vividly describes a number of billing no-no’s, including: billing more than one client for the same hours; billing time during travel to one client while working on another client’s matters and billing the second client as well; “continuous toil on or overstaffing a project for the purpose of churning out hours;” and marking up expenses, such as meals. (The latter practice prompted the ABA Ethics Committee to opine colorfully that “[t]he lawyer’s stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services.”)
Blocking and tackling
When a client alleges misconduct against a lawyer or firm, the burden of proof is on the client. But what we know about the tendencies of juries suggests that any lawyer should want to be in the best position possible to justify his or her fee if it is ever called into question. We’re not playing football here – less blocking is better.
Karen E Rubin is a member of Thompson Hine’s business litigation group. She is a former chair of the Certified Grievance Committee of the Cleveland Metropolitan Bar Association, and a member and past chair of the Ohio State Bar Association’s Ethics Committee. She also chairs that committee’s Ethics Opinions subcommittee, and has authored several ethics opinions on behalf of the OSBA interpreting the Ohio Rules of Professional Conduct. Karen also is an adjunct professor at Cleveland-Marshall College of Law, teaching legal ethics.