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 — rampant “block” entries, unauthorized billers, a stubborn dearth of detail — are a fading memory. Over the last two decades or so, sophisticated buyers of legal services have tightened up billing standards, poured money and time into auditing, and routinely questioned what they’re getting for all those “0.2 hour” line items.
At the same time, courts and the bar have also become far more strict about what constitutes a “good” — and ethical — legal bill and helped cure the profession of at least some of its worst timekeeping habits. But that doesn't mean overbilling doesn't happen or that the partners and managers responsible for reviewing bills can let down their guard.
“Law firms across the board have really improved their quality control, and if it keeps up like this, one day they’ll put me out of business,” said California legal fee auditor Jim Schratz. “But I can also say they’re still far from perfect, and sometimes they just increase the chances their bill doesn’t get paid.”
Here are three overbilling trouble spots to watch for.
All Those Meetings
Any review of a legal bill, either before it goes to the client or an audit after the fact, should include a hard look at time billed for meetings, particularly repeat “update” meetings, experts say. Professional auditors say “interoffice” get-togethers and conference calls are routinely scrutinized by cost-conscious clients for overbilling or inefficiencies. But many firms still bill meeting time for people not clearly involved in the active issues in a case, or reflexively bill for the entire length of a meeting that might also cover nonbillable topics.
A good rule of thumb: Meetings attended by attorneys and support staff should represent 5% or less of all time billed over the course of a matter, professional fee auditors say. Anything more reasonably invites questions about whether the client is paying to have billers “listen in” but not really push the client’s case forward.
“There are lots of things a lawyer can’t control, like how many depositions the other side calls,” Schratz said. “But there are plenty of things you can, including staying away from these repeat entries saying something like ‘Conference with Joe’ when it’s not clear what Joe really contributed.”
Managing a Case vs. Managing the Business
Another flashpoint for overbilling comes at the intersection of partners working with junior lawyers doing billable work, and the more “supervisory” and firm-business kinds of tasks that aren’t. While the agreed-to billing rules of engagements can vary, as a general rule, lawyers describing substantive legal work on time sheets should avoid "delegation" or administrative-sounding descriptors — training, assigning and proofing, to name a few examples.
Elise Frejka, a New York attorney and fee expert, said clients want to see "bang for their buck" language that doesn't imply that a biller is simply overseeing another biller's work. "There is a trust factor here, and there is also good word choice," she said. "And if I ever see the words 'ponder' or 'consider,' well, that sounds to me like something you should be doing in the shower."
John Trunko, legal audit director at fee audit firm Stuart Maue, agreed that practice leaders and managers can confuse client and supervisory duties, particularly when they’re overseeing lawyers and paralegals spending most of their time supporting the partner's matter. “There is some gray area there, when you’re talking about billing for a specific discussion [with a junior person] related to an aspect of a case, or if it’s really about supervising and training someone more generally on their job or even just transmitting information to them,” Trunko said. “At some point, that does become an administrative function rather than a billable piece of legal work," he added.
The practice of block billing, in which lawyers include a long series of billable tasks in a single time entry, is widely understood to lead to client “upcharging” and has been rightly disparaged by many judges and bar ethics committees. And in an era of increased scrutiny on outside legal budgets, many corporations explicitly prohibit law firms from using block billing in outside counsel guidelines. But the practice persists, even if it’s not nearly as common as it was a decade ago.
Today, fee auditors say they often see firms grouping small numbers of billable tasks in single time entries. And such “miniblock" billing isn’t necessarily a bad thing — as long as the client doesn’t object and the described tasks are obviously related, experts say. Still, practice group leaders and supervising partners should double-check that block entries are used consistently and moderately. That's particularly true in the last months of the year, as associates, and many partners, feel pressure to bill every hour possible.
Kay Holmen, a senior auditor at KPC Legal Audit Services in Glendale, California, cautions against grouping more than three tasks in one block, or block billing a client for more than a single hour per entry. Lawyers can also avoid pushback by taking some extra care to describe each step covered by a block entry. “Take the few extra seconds. Come up with some words that describe what you really did. If you say you’re doing document review and writing a memo, what specific document did you look at?” Holmen said. “Don’t put a copy-and-paste description on the time sheet.”