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Category: Ethics & Professional Responsibility

Federal Judge: Botched Attorney Fee Requests Will Cost You

March 6, 2020

A recent Law 360 story by Chris Villani, “Labaton Rebuke Sends Message: Botch Fees and Pay a Price,” reports that by slashing $15 million in fees from Labaton Sucharow LLP and Thornton Law Firm LLP for a $300 million State Street Corp. settlement, a federal judge sent a sharp warning to the class action bar to remain vigilant about attorney fee fundamentals, or else risk an embarrassing and possibly expensive fight.

Double checking lodestar calculations before submitting a fee request, signing off on fee declarations, being careful about referrals and erring on the side of disclosure seem like routine activities for class action firms.  But if major players in the field like Labaton and Thornton can get slapped down by a federal judge for falling short on the basics, it should catch the attention of other firms across the bar, experts told Law360.

“It's a very important decision for all class action lawyers to pay close attention to, particularly when submitting lodestar applications, when contract attorneys are involved, when you have rates that you report to the court are your hourly billable rates,” said Lance Harke of Harke Clasby & Bushman LLP.  “There's a number of significant issues for all of us.”

The long-running fight began after Labaton Sucharow, Thornton Law and Lieff Cabraser were awarded a $75 million fee after reaching the nine-figure settlement.  A media report unveiled allegations of double-counting hours, which the firms admitted but asked the court to let slide.  But what the firms called an inadvertent mistake instead led to U.S. District Judge Mark L. Wolf's vacating the fee award and appointing retired U.S. District Judge Gerald Rosen as a special master to investigate.

Rosen suggested chopping up to $10 million from the fee, but Judge Wolf ended up reducing the award by $15 million and sending his order to the Board of Bar Overseers for potential disciplinary action.  “This case demonstrates that not all lawyers can be trusted when they are seeking millions of dollars in attorneys' fees and face no real risk that the usual adversary process will expose misrepresentations that they make,”  Judge Wolf wrote in the 160-page order.

Rosen’s investigation turned up a number of problems, including a false fee declaration signed by Thornton Law’s managing partner, Garrett Bradley, that he called a “stupid mistake” during a subsequent hearing.  Thornton was accused of trying to inflate the firm's lodestar by having lawyers bill at a higher rate than Rosen believed they should.

Drawing perhaps the most scrutiny was a $4 million payment to a Texas lawyer named Damon Chargois.  Chargois did not work on the case, but he did introduce Labaton Sucharow to the lead plaintiff, the Arkansas Teacher Retirement System.  The fee was never disclosed to the class or Judge Wolf.

John Coffee Jr., a professor at Columbia Law School with expertise in class action and securities litigation, was skeptical that the arrangement Labaton Sucharow had with Chargois is unique.  “That suggests that there are major plaintiffs’ law firms, and the Labaton firm is a major plaintiffs’ law firm, that have a business model of effectively buying lead plaintiffs on an open market from these finders,” Coffee said.  “The practices [Rosen] uncovered is like turning over a rock in the field and finding some ugly things crawling around.”

Another retired judge, hired by Labaton Sucharow, found that the Chargois arrangement was an aberration and that in other instances involving referral fees, the lawyers who referred the case did substantial work.  The firms vigorously pushed back against Rosen’s conclusions, and Labaton Sucharow even tried to have Judge Wolf removed from the case.

In a statement Friday, Labaton Sucharow said the Chargois arrangement was a one-off and highlighted the settlement it reached with Rosen in which it agreed to pay $4.8 million and institute new best practices regarding referral fees.  Judge Wolf “chose to ignore” the settlement, the firm said.  “We now identify who will be sharing in any fee the firm is awarded, regardless of whether the jurisdiction requires such disclosure,” Labaton Sucharow said, adding that a payment like the one in the State Street case is legal in Massachusetts.  “We are confident that the concerns raised in this case were an anomaly.”

But even those who support class actions as a valuable legal tool said Rosen’s findings are a black eye for a bar that already faces public criticism over the massive fees doled out to lawyers.  “Lawyers should not behave this way,” said Deborah Hensler, a professor at Stanford Law School.  “This is not the way that this powerful tool is intended to be used.  When leading class action firms appear to have been engaged in self-serving behavior, whether or not it complies with a narrow definition of the rules, it’s highly inappropriate and it weakens the arguments for continuing to use class actions.”

Francis Scarpulla of the Law Offices of Francis O. Scarpulla said the double counting seemed seemed unintentional on the firms' part, rather than Labaton trying to pull a fast one.  He also said the Chargois arrangement should have been disclosed.  The lesson, he said, is to be extra careful with fee declarations.  “Judges have to trust what lawyers tell them, and if they lose that trust, you can forget about that judge believing anything you tell him or her,” Scarpulla said.  “Even if it's the time of the day and you're both looking at the same watch.”  The worst-case scenario for the class action bar would be the U.S. Supreme Court getting involved in a class action fee fight, he added.

Other jurists have taken notice of the State Street case.  A few days after Judge Wolf’s order, another judge sat in a Boston courtroom and warned the class action firms before her about the scrutiny they would face if and when it came time for them to submit fee declarations.  “I don't know how many of you have read Judge Wolf’s order from this week,” U.S. District Judge Indira Talwani told the lawyers at the outset of a hearing over which firm would lead an ERISA suit against General Electric Corp. “If you haven't, you should.”

“If I was a class action lawyer, I would read the entire 160-page order twice, with a highlighter,” said Jan Jacobowitz of the University of Miami School of Law.  “And I would review the billing practices in my firm, which lawyers should do from time to time anyway, and just be especially careful to dot all my I’s and cross my T’s.”  The incentive is strong to follow the rules carefully, Jacobowitz said, because firms “are still going to make a whole lot of money” and can do so without the professional embarrassment of a scandal like this one.

Labaton Sucharow ended up losing more than $10 million in fees from the original amount approved by Judge Wolf to the amount awarded after the investigation.  Thornton Law lost nearly $7 million.  Even Lieff Cabraser, which emerged largely unscathed as Judge Wolf laid the blame on the other firms, had to shell out a portion of the nearly $5 million spent on Rosen’s investigation.

As rough as the lengthy battle was for all of the firms involved, they still each brought in eight-figure fees for their work on the State Street case, with the total fee reduced from 25% to 20% of the amount recovered for the class.  “That does not strike me as a major victory for four years and a special master and a significant amount of alleged misconduct,” said Daniel Klerman of the University of Southern California's Gould School of Law.  “For those lawyers, if I had gone through four years and I had a judge who sounds as hostile as this judge appears, I would be jumping for joy if I only lost 20%.”

Article: Some Litigation Too Complex for AI Attorney Fee Predictions

March 2, 2020

A recent Law 360 article by Paul Aloe, “Discrimination Cases Are Too Complex For AI Fee Prediction,” responses to another Law 360 article, “Legal Prediction is Demanding But Not Impossible.”  This article was posted with permission.  The article reads:

A recent Law360 guest article by Joseph Avery criticizing the New Jersey Supreme Court’s opinion in Lisa Balducci v. Brian M. Cige shows a profound misunderstanding of the opinion and the nature of hourly fee retainers.  The article overlooks that even with artificial intelligence, an experienced litigator cannot safely predict the hourly fee of a litigated case.

That is especially so with respect to cases under the New Jersey Law Against Discrimination, or NJLAD, with which Balducci v. Cige dealt.  Those cases are often highly charged and emotional — and the length and work required is very difficult to predict.

Some cases resolve quickly, many after protracted litigation.  The New Jersey Supreme Court was entirely correct that predicting the cost and length of a new case is "a difficult, if not impossible, task" and thus lawyers are not obligated to provide a calculation of the entire fee that will be incurred at the outset of the litigation.

The decision itself recites factors that make that so, including whether the cases is settled or tried, "the nature and length of the discovery process, the number of depositions conducted and expert witnesses retained, the overall complexity of the litigation, and many other factors."

The opinion in Balducci v. Cige makes complete sense in the context of which it was decided.  This was a NJLAD case, and the courts below found that the attorney had assured the client that she would not have to pay the hourly rate, even though the retainer said otherwise.

There is also an indication in the decision that the attorney admitted padding his invoices.  When the client became dissatisfied with the attorney, and exercised her right to terminate the attorney, the attorney then presented her with a bill for $270,791, which she likely had no means to pay.

This of course is not the typical hourly arrangement, where a client receives a regular invoice, calculated on the hours expended, and pays that invoices as the litigation progresses.  In that situation, if the client chooses to terminate the lawyer, the client is free to do so.  In this case, the billing contradicted the oral assurances that the fee would be paid by the client, which undermined her right to change attorneys.

Discrimination cases are very different than the typical hourly fee arrangement.  Discrimination cases are often brought with the expectation that the fee will be paid by the defendants, either as part of a settlement or at trial, which appears to be the situation in this case, even though the actual retainer agreement said otherwise.

Of course, NJLAD cases present special circumstances that do need to be considered.  While it is often the case that the attorney receives his or her fee from the defendants as part of a settlement or judgment, that is not always the case.

The case can be lost at trial, the plaintiff might decide to no longer pursue the case, the court might award some but not all of the fees incurred, the plaintiff might win a judgment that includes fees, but the defendants might go bankrupt or otherwise be unable to pay it.  Although New Jersey Rule of Professional Conduct 1.5(b) only provides "[w]hen the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated in writing to the client before or within a reasonable time after commencing the representation," it is entirely appropriate that the retainer agreement in a NJLAD case spell out exactly when and under what circumstances a client may personally have to pay the fees.

Some situations where fees are not recovered may be the fault of neither the lawyer nor the client.  For example, where the defendant goes bankrupt rather than paying a judgment.  Other situations may be more complicated, as when the client loses the ultimate case, which could be the result of the client not being credible, the handling of the case by the attorney, or both.  These situations are not easy to spell out, but it is important at the outset for the lawyer and the client to have an understanding of who is bearing this risk.

Balducci v. Cige, however, presents a particularly important ethical issue, because the client was exercising her right to terminate counsel.  The rules of professional ethics afford clients the unfettered right to discharge counsel, but in this case, it seems the retainer was used in such a fashion as to undermine that right.

Of course, there are situations where a client, just before receiving a settlement, might choose to terminate the attorney.  Another factor is that where the client discharges the attorney, but continues the case, and ultimately receives an attorney fee award, the award would presumably compensate both the old and the new attorney.  A still further situation may be where a client, having commenced a NJLAD case, decides to no longer pursue it.  These types of cases in particular are difficult cases for the plaintiff.

The defense is often able to suggest that the underlying problem was with the plaintiff, not the defendant, and even where that is not the defense, since the NJLAD deals with unlawful discrimination, the pursuit of the case may be very painful for the plaintiff.  Clients of course should be free to discontinue suits, but the discontinuance leaves the attorney without a fee.

Again, if the client were regularly paying an hourly fee that decision would be entirely up to the client.  But where the parties have agreed that the fee will be paid by the defendants, the parties need to consider what occurs if the client decides to discontinue the suit.

All of these are difficult issues.  The New Jersey Supreme Court wisely directed the appointment of an ad hoc committee to address the ethical issues raised in its decision.  In the NJLAD situation, many of those ethical issues are difficult and complex.  Requiring attorneys to use artificial intelligence to make predictions is rightfully not endorsed, and deemed nearly impossible, by the court.

Paul Aloe is a partner at Kudman Trachten Aloe LLP in New York, NY.

Law Firms See Attorney Fee Reductions from State Street Case

February 28, 2020

A recent Law 360 story by Chris Villani, “3 Law Firms See $15M Chopped From State Street Fees,” reports that a federal judge slashed attorney fees for Labaton Sucharow, Thornton Law and Lieff Cabraser from $75 million to $60 million, ending a years-long battle over alleged overbilling in the State Street Corp. case with an order stating "not all lawyers can be trusted."  U.S. District Judge Mark L. Wolf said the firms involved, particularly Labaton Sucharow LLP and Thornton Law Firm LLP, repeatedly violated the rules of professional conduct by overbilling and failing to disclose a $4.1 million finder's fee paid to a lawyer who did not work on the case, which resulted in a $300 million class settlement between State Street and investors.

Judge Wolf approved a $75 million fee in 2016 but vacated that order after the double-billing allegations surfaced in a media report, and he appointed retired U.S. District Judge Gerald Rosen as a special master to investigate the fee.  Rosen in 2018 recommended the firms disgorge just over $10 million, but Judge Wolf's 160-page order ruled that the cuts should be even deeper and took the firms to task in the process.  "The United States has a proud history of honorable, trustworthy lawyers," Judge Wolf said.  "However, this case demonstrates that not all lawyers can be trusted when they are seeking millions of dollars in attorneys' fees and face no real risk that the usual adversary process will expose misrepresentations that they make."

In issuing his order and adding more than $14 million to the class's cut, Judge Wolf urged judges to be "skeptical" and "do the hard work necessary to protect the interests of the class and the integrity of the administration of justice."  The final cuts for the three firms in the case, which was filed in 2011, came in at just over $22.2 million for Labaton Sucharow, about $13.26 million to Thornton Law and about $15.23 million to Lieff Cabraser Heimann & Bernstein LLP.

Another $10,716,526.15 was awarded to Employee Retirement Income Security Act lawyers who worked on the case, according to the order.  Those lawyers had argued for additional fees, saying they did not know about the Labaton Sucharow referral payment.  The special master's report and recommendation had suggested reducing the fees from $32 million to about $26 million for Labaton Sucharow; from about $20 million to about $17 million for Thornton Law; and from about $16 million to about $13 million for Lieff Cabraser.  Lieff Cabraser took the smallest hit in Judge Wolf's order, and he laid the misconduct in the case on the other two firms.

Judge Wolf's order follows years of fighting and numerous hours-long, and sometimes days-long, hearings in his Boston courtroom since the billing issues arose.  The judge chastised Labaton Sucharow for "secret" payments to a Texas lawyer named Damon Chargois, who introduced the firm to the lead plaintiff in the State Street case, the Arkansas Teacher Retirement System.  Thornton Law managing partner Garrett Bradley also signed a false fee declaration, Judge Wolf said, something Bradley lamented as a "stupid mistake" when testifying in one of the case's hearings.

"The staff or contract attorneys Thornton claimed in its lodestar did not work for Thornton," Judge Wolf said. "Rather they were employed by Labaton or Lieff and paid for by Thornton, primarily to increase Thornton's lodestar and thus its claim for a higher percentage of the fees that would foreseeably be awarded."

Judge Wolf wrote that the past few years have led him to believe that he awarded too much money the first time around.  "Many of the representations made to the court in support of the request for attorneys' fees by Labaton and Thornton, and to a lesser extent by Lieff, were untrue," the judge said.  "In addition, the court now realizes that the relationship between ATRS and Labaton in this case was very different than the previously described paradigm for complex class actions."

Labaton Sucharow reached a proposed settlement with Rosen and the ERISA counsel in 2018, agreeing to accept scrutiny over its referral practices and pay $2.1 million to the class and $2.75 million to ERISA lawyers.  The firm said in a statement that it is "extremely disappointed" that Judge Wolf did not accept the proposed accord and "ignored" the special master's finding that the Chargois payment did not violate professional conduct rules or constitute intentional misconduct.

It said the judge also ignored the findings of another retired federal judge, Garrett Brown, who reviewed the firm's referral fees and found that the Chargois payment was an anomaly.  "We believe the court has delivered a judgment that is neither consistent with the factual record in this case, nor our historical record," Labaton Sucharow said.  "We are reviewing our options in light of the court's rejection of the proposed settlement."

The underlying suit, filed in 2011, alleged that State Street swindled millions of dollars a year from its clients on their indirect foreign exchange trades over the course of a decade.  The billing issues first came to light in a 2016 Boston Globe report.  The firms admitted to overstating their billing but said the $75 million fee was still proper.

With the benefit of a second look, Judge Wolf wrote that he would have likely reduced the award anyway because class actions generally settle once they get past the motion to dismiss stage.  Any risk taken by the lawyers was greatly reduced once the State Street case was not dismissed, the judge wrote, adding that he has not tried a class case since he took the bench in 1985.

"On closer scrutiny, the court has decided that even absent the serious, repeated misconduct of Labaton and Thornton, an award of less than 25% of the common fund would be most appropriate," Judge Wolf wrote. "However ... in this equitable proceeding it is permissible and appropriate to take that misconduct into account in awarding and allocating attorneys' fees."

NJ Justices Toss ‘Unsound’ Attorney Fee Ethics Rules

January 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Justices Throw Out ‘Unsound’ Ethics Rules for Atty Fees,” reports that the New Jersey Supreme Court upended new ethics rules from an appellate panel with respect to attorney fees in discrimination and related cases, saying they could have “far-reaching and negative effects” on lawyers and their clients.  The justices reined in those “ethical pronouncements” from the panel's 2018 published decision affirming a trial court’s orders declaring Brian M. Cige’s agreement with Lisa Balducci unenforceable.  The Supreme Court said a new ad hoc committee of judges and attorneys will be created to address such issues and make recommendations to the court.

“Some of those pronouncements appear too broad and some unsound, and others are worthy of the deliberative process by which new ethical rules are promulgated by this Court,” Justice Barry T. Albin wrote in the unanimous opinion.  The ethical obligations set forth by the panel covered attorneys handling New Jersey Law Against Discrimination and other fee-shifting cases when a retainer agreement includes hourly fees.  In fee-shifting actions, a defendant is responsible for a prevailing plaintiff’s reasonable attorney fees.

Among those rules, the Supreme Court rejected the panel’s finding that such attorneys must provide clients with “‘examples of how much hourly fees have totaled in similar cases.’”  That requirement “imposes a difficult, if not impossible, task,” the justices said.  “The attorney would have to know whether the ‘similar case’ settled or was tried, the nature and length of the discovery process, the number of depositions conducted and expert witnesses retained, the overall complexity of the litigation, and many other factors,” Justice Albin wrote.

The justices challenged the panel’s directive that attorneys inform clients that “‘other competent counsel represent clients in similar cases solely on a contingent fee basis, without an hourly component,’” noting that clients may benefit more from an hourly-fee deal than a contingent-fee arrangement.  The Supreme Court also expressed doubts about the panel’s pronouncement that attorneys “‘disclose other competent counsel who represent clients in similar cases advance litigation costs.’”

“Must an attorney refer a potential client to a competitor who may be less experienced or skilled merely because that attorney advances litigation costs?” the justices said.  “The answer to that question suggests that the Appellate Division’s disclosure requirement must be considered critically.”  The panel further asserted that “‘if the attorney has no such experience with similar cases ... consideration should be given to referring the case to a certified civil trial attorney,’” but the Supreme Court questioned whether that was correct as well.

The justices noted that “an attorney who has represented a client in one particular species of LAD cases may be no less capable of handling another species of such cases.”  “In addition, without in any way diminishing the value or importance of the designation of certified civil trial attorney — a special designation that signals that an attorney has recognized competence and experience as a litigator — certification is a voluntary, lawyer-initiated process, and some of the finest attorneys in their respective fields have decided not to seek certification,” the Supreme Court said.

The Supreme Court, however, upheld the panel’s finding that Cige’s retainer agreement was invalid.  Balducci retained Cige in 2012 to represent her son in an LAD lawsuit against a school district over bullying he had faced, court documents state.  The retainer agreement stated that Cige was entitled to the greater of three fee calculation methods: his hourly rate, a contingent fee or an award of statutory attorney fees, court documents state.

Balducci has claimed that Cige told her she would not have to pay his hourly fees, although the retainer agreement indicated otherwise, court documents state.  She has said Cige assured her the attorney fees would be covered by the school board, court documents state. Cige has denied making any statements that conflicted with the written agreement, according to the court documents.

The agreement also did not specify what Cige would charge Balducci for expenses, including $1 for every email sent or received, court documents state.  After Balducci terminated his services in 2015, Cige billed her for about $286,000 in fees and expenses, court documents state.  Balducci then filed the instant action seeking to have the agreement declared unenforceable, court documents state.

A trial court heard testimony from Balducci, her son and Cige, and sided with Balducci in invalidating the agreement, court documents state. The appellate panel upheld that decision.  In affirming the invalidation ruling, the Supreme Court concluded there was “sufficient credible evidence in the record” to back up the trial court’s findings.

“The court accepted Balducci’s assertion that she would not have retained Cige had he informed her that she would be responsible for his hourly fees if the lawsuit failed.  The court, moreover, determined that ‘a reasonable client’ would have viewed the retainer agreement as a typical contingent-fee arrangement, obligating the client to pay a percentage of a monetary recovery only if the lawsuit succeeded,” the justices said.

Article: Ten Ways That Outside Counsel May Hide Overbilling

January 16, 2020

A recent Corporate Counsel article by Ryan Loro, “10 Ways That Outside Counsel Disguise Overbilling,” reports on overbilling from outside counsel.  This article was posted with permission.  The article reads:

Legal invoices can be overwhelming and nearly impossible to understand. The task of sifting through line after line of attorney time entries from outside counsel is time consuming, and more times than not, in-house legal and accounting teams may miss billing errors. Despite the complexity of legal invoices, there are ways to spot overbilling if you know what you are looking for.

According to recent industry research, large companies with big legal departments go over budget by about 37% every single year. Why do they go over budget? A big reason is overbilling from the outside law firms they hire to do work for them.

It’s become such an issue that entire companies have been formed to help businesses analyze and help organizations manage their legal spend. That’s right, lawyers sometimes pad their billable time—and there is now a growing industry to ensure that businesses pay a fair amount for their legal services.

Here are the top 10 ways law firms can hide overbilling:

Block Billing. Block billing is when a lawyer enters multiple tasks under one time period, without separating the time each task took. Here is an example from an actual time entry reviewed by SIB Legal Bill Review:

7.6 Hours: Telephone call with client regarding assignment of rents; review lease agreement of [company]; draft agreement; emails with opposing counsel; revise agreement accordingly.

Block billing obscures the value to the client and the reasonableness of the charges for a given task. If you don’t know how long it took to draft the contract (because drafting the contract is one of five tasks within a 7.6-hour block of time), you can’t tell if the charge for drafting the contract is reasonable. One study by the California Bar Association concluded that block billing increases the time charged by an average of 23%.

Intra-Office Communications. Intra-office communications is when multiple attorneys within the same firm discuss the client’s matter with each other or seek advice from a colleague about a legal issue. One of the major selling points for larger law firms is that they have a breadth of knowledge in specialized subjects. But when a lawyer seeks a colleague’s advice, the client should not have to pay for one attorney to educate another—just have the specialist handle that part of the matter.

Higher-Rate Staff Used Inappropriately. Sometimes lawyers will do work that is more appropriate for a lower-rate attorney or a paralegal. For example, if a partner’s rate is $900/hour and they perform a task that, more than likely is work that a second-year associate attorney who’s rate is $300/hour should be doing, the client will be paying an additional $600 per hour.

Excessive Time. This is the most common complaint of clients, yet has historically been the easiest for law firms to justify. Many clients have a “feeling” that a certain task took too long, but cannot explain why. SIB Legal Bill Review explains in detail the reasons a law firm should reconsider specific charges on an invoice. Here is an example:

The law firm charged 5.1 hours for work on a confidentiality agreement where opposing counsel had already provided a comprehensive draft agreement for comment and markup. This time is excessive. We propose the charge be revised to a total of 2.5 hours: 2.0 for analysis and markup of the draft agreement, and 0.5 for negotiation of points with opposing counsel.

Junior Lawyer Training. Law firms have been known to charge clients for a junior lawyer’s on-the-job training. We believe that the law firm carries the financial responsibility for training its lawyers; it is for the law firm’s long-term benefit. On an invoice we reviewed, one law firm actually charged $1,084 to the client for a junior lawyer’s time to “investigate how to file an appeal.” Of course, there is a point in the junior lawyer’s career when they need to learn how to file an appeal, but the client should not have been asked to pay for that training.

Inadequate Description. When a lawyer does not adequately describe his activity, there is no way for the client to determine if that activity added value for the client or if the charges for that activity are reasonable. Attorneys are paid to be precise in their language. It is not unreasonable to require lawyers to accurately describe how they spent their time and the client’s money. More problematic, inadequately described time can be camouflaging the fact that the attorney invented the time entry to fill his time card or increase the bill. Here is an example of a real time entry:

Attention to licensing files and review of licenses and leases; attention to pro-forma license transfer structure; additional review of proposed structure; attention to fees and timing relevant to pro-forma and non-pro forma assignment; address related licensing matter.

At first glance, it appears that this associate has done a lot of work for the client. But notice that the task descriptions are all nebulous: “attention to … ; analysis of … ;” and so on. In this particular time entry, no actual work product was produced. The client has no way of knowing what value was delivered because of this inadequate description.

Over-staffing a Given Task. Many times, a law firm will over-staff a task, using three attorneys for something that should have only taken one. More often than not, the time for all three attorneys is billed to the client. Defending a deposition and arguing a discovery motion are usually one-lawyer tasks and should be billed as such.

Duplicative Work. Duplicative work is an issue that occurs when one attorney will charge for the same task in more than one billing period, or two attorneys will charge for the same task in the same billing period. Here is our response to an instance of duplicative work:

Junior lawyer charged 25.1 hours ($6,149.50) to draft motion for summary judgment. Senior lawyer charged 14.6 hours ($4,844) to draft the same motion at a later date.

In this particular case, the client did not receive 39.7 hours of work. If the law firm decided to push a motion for summary judgment draft onto a junior lawyer, only to have it rewritten by a senior lawyer, this is not the responsibility of the client.

In fact, according to a study conducted by Samford University Law School in 2007, 48.2% of lawyers believed double billing was ethical, which was up nearly 13% from 10 years prior. It would not be surprising to learn that 12 years removed from the study that the percentage of lawyers who believe double billing is ethical and acceptable has exceeded the 50% mark.

Administrative Tasks. Sometimes law firms will charge attorney or paralegal rates for tasks that could and should be done by administrative staff. The client should not pay $300 an hour for filing a court document. That type of task should be done by a legal secretary at no charge, as part of the firm’s overhead costs.

Discrepancies Between Time Entries. A simple mistake that happens more often than you would think is when two lawyers attend the same meeting but charge different amounts of time for doing so. Another example in discrepancies between time entries occurs when one lawyer charges for an in-office task when another time entry shows she was not in the office that day. The variations of discrepant time entries are many, but the conclusion is singular: one of the time entries is probably inaccurate.

Analyzing the line item charges on legal bills is no small task. The analysis itself is 60% experience in legal practice, 30% psychology, and 10% mechanics and mathematics. Unfortunately for many businesses, computers can only assist in the last and smallest category. Then, when the analysis is done, someone has to negotiate with the billing attorney to convince him that certain charges are unreasonable and should be removed from the bill.

All of this is a daunting task. There is hope for businesses who fear they are being overcharged. Even if you don’t have the resources inside your organization, these functions can be outsourced. Legal bill review services help to increase efficiency and take the burden away from in-house teams and businesses so that they can focus on their work. Finding a legal bill review service that analyzes every line item of all of your invoice every single month is an important and efficient way to help reduce your organization’s legal spend with outside counsel.

Ryan Loro is the president of SIB Legal Bill Review.

Three Places Overbilling May Be Lurking

December 2, 2019

A recent Law 360 article by Andrew Strickler, “3 Places Overbilling May Be Lurking,” reports on overbilling.  The article reads: By most accounts, the wild ol’ days of lawyer invoicing —...

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