Make sure billing
practices are bulletproof
By Diane Karpman
Billing of clients represents
the most constant moral dilemma many of us face. Economist Laurence Summers is
reputed to have once advised Sheryl Sandberg, Facebook’s new COO, “to bill like
boys.”
I can only speculate as to
what that means, but it strongly suggests there may be some gender issues in
play in the act of billing. Beyond gender issues, feelings of inadequacy do impact
the act of billing clients. Billing is highly subjective and complicated. There
are even studies that indicate that depression can have an impact upon billing.
Consider:
Many billing issues surround
the controversial practice known as “block billing,” which in California is not
per se unethical. Block billing, the use of only one total time description for
a group of acts, is, however, not a favored practice. (Arbitration Advisory 2003-1, Detecting Attorney Bill
Padding).
Basically, that means that
each separate task requires a separate detailed description in the final bill. Attorney
Gerald F. Phillips, author of “Fair Deal for All Clients,” contends that each
phone call requires a note and a description of what was actually discussed.
Importantly, it’s just not
the phone call. One must also consider the preparation for the call. Many
retainers and engagement agreements spell out a charge of two-tenths of an hourly
fee for a phone call of 12 minutes. This is known as a minimum increment. If a
high minimum is employed, this can increase the time. Courts have criticized a
charge of 25 percent of an hour for a quarter-hour as being too high. Gerry and
I do not agree on many aspects of this sensitive subject. If you want to know
how a time maven could decimate and destroy your hard-earned fees, you should
check out the book for protection.
On a personal level, when I
block bill, it saves my clients’ money. They are literally charged more when
the time is specifically broken out and delineated. In another example of a
billing quandary, there is a prominent firm in a highly regulated area of the
law that is required to charge their carrier clients a fixed minimum increment.
If they did not, they would not be paid. On many occasions, they would like the
option of charging less, but wouldn’t be paid. Also, nobody is really charging two-tenths
of an hour for those “yes or no” emails. You have to be fair.
Contemporaneous time records
are more accurate, and represent the best practice, but they are highly
unlikely for contingency fee practice. "An attorney's testimony as to the
number of hours worked is sufficient evidence to support an award of attorney
fees, even in the absence of detailed time records." Steiny & Co.
v. California Electric Supply Co. (2000) 79 Cal. App.4th 285. Also, often
contingency fee lawyers spend more time on a project, because as investors in
their client’s cases, they can and want to guarantee victory.
Here are examples of
descriptions deemed by the State Bar’s Committee on Mandatory Fee Arbitration to
be inadequate because they did not provide the client with enough information
to know what was really going on: “research issues,” “attention to file,”
“discovery” and “ prepare for trial.” Billing descriptions are highly
circumstantial. When you are sitting in trial with your client for six hours,
how much more of a description do they need to give the client?
Billing is a huge headache. I
simply want you to be paid in order to continue to provide for your dependents
in the lifestyle to which they have grown accustomed. For more information, see
my Feb. 9, 2009 article “Avoid Problems When Billing Your Clients.”
Even lawyers have been known
to air their griefs for a song … literally. One Texas-based all-lawyer ensemble
known as Bar and Grill sings a tune called “Bill Me Anytime,” which explains what clients don’t
understand about the billing process. Take two minutes and listen to it. You,
too, could be singing a different tune.
Happy Holidays.
Legal ethics expert Diane
Karpman can be contacted at 310 887-3900 or at karpethics@aol.com