October 21, 2006 (Original publish date) • By Dennis Beaver
Last week we began a look at what can only be described as completely unjustifiable and excessive attorney billing practices. One glaring and common example is scheduling court appearances – in the same courtroom and at the same time – for several clients yet billing each for all of the time spent in that courtroom. That way, a one hour appearance generates perhaps five hours of revenue, instead of each client paying a portion of the time really spent.
Another is re-using the same materials – a lease, wills, family trusts, partnership contracts, divorce settlement agreements, interrogatories – making a few changes, and then billing as if the entire document had been created just for that client, over many hours time.
The American Bar Association – and California Bar as well – have addressed these issues and clearly stated that where a lawyer has agreed to bill solely on the basis of time spent, there is an obligation of passing along the benefits of previously developed work product as well as apportioning time spent in court for several clients. “A lawyer who spends four hours of time on behalf of three clients has not earned 12 billable hours,” the ABA wrote some years ago in its model ethical rules. California follows the same guidelines.
Today, it would be the rare lawyer indeed who did not have a wealth of frequently used legal forms (templates) that are computer accessible in seconds. With a simple, mom and pop will, or 75 page commercial lease, it takes minutes to enter the new information, and abracadabra, out pops your new document. Sure, fine tuning is generally required and it is fair to pay for having the document tailored to fit the needs of the client, but not re-inventing the wheel!
The Orange County Bar Association issued an opinion some years ago directly on point, stating, “Absent clear disclosure to the client, attorneys cannot properly add additional hours to a client’s bill when revising an in-house form to reflect the time spent preparing the original (template) form.”
Do all lawyers engage in these billing practices? No, of course not, but a lot do, and in my experience many of the major law firms have it down to a science. “Advancement here is all about generating billable hours – nothing more,” was the comment I heard over and over again from attorneys in large law firms who agreed to speak with me about this dirty little secret. “You want to make partner? Bring in work, or crank out those hours. That’s what it’s all about, not your competence or the quality of your advice, and certainly not if you have been able to save your client money!” is what an employee of a large, multi-office firm told me. He, by the way, is at the office 12 hours a day, and “must bill at least 16 hours a day, if not more.”
So how do you protect yourself from unfair and excessive billing practices? Through knowledge, that’s how. Understanding that you have rights, and hiring a lawyer is not a “take it or leave it” proposition.
Let’s begin with the retainer agreement. In general, if the attorney fees will exceed more than $1,000, a written fee agreement is required. It must set out how the lawyer bills. Be aware of “non-refundable attorney fee” provisions. In my opinion, such language in a retainer agreement should cause a client to run the other way. Why? Because, it invites abuse. It is simply not fair. As clients tend to be afraid to object or ask questions about attorney fees, too few are asked.
Criminal law is one area that invites predatory fees, and it is, as a colleague of mine down the street once boasted, “Easier than taking candy from a baby because the clients are so worried.” Many criminal defense attorneys require a very large retainer – but do not bill against it on an hourly basis. For example, $3,500 retainer for a DUI. But if the lawyer makes two court appearances and please the client guilty, does a fee of $1,000 an hour seem reasonable or fair?
I believe it is better to negotiate an hourly rate, deducted from that retainer. That’s how many lawyers I know run their practice, avoiding the criticism, “I paid $5,000 and after one court appearance was forced to plead guilty.”
As a client, do not be scared or frightened into hiring any lawyer. Ask for time to study the retainer agreement, and read it carefully. To avoid the pitfalls discussed in this article, assuming that yours is going to involve major litigation, with frequent court appearances and you’ve hired a fairly large law firm, discuss how they bill when going to court. Make it clear that if they are making multiple appearance for several clients that you expect the fees to be apportioned.
It is critically important to fully understand that an attorney-client relationship is negotiable. There are no “cast in concrete” fees and if what a lawyer is charging seems to be more than is reasonable or more than what you can afford, say so. Lawyers will often reduce fees – law is a business.
This is especially true with Personal Injury cases. While in general it is customary to pay 33-1/3 percent before litigation, many attorneys have preferential fees for unions of 20 to 25 percent, so ask for a discount, even if you are not a union member!
Make it clear – and have this added to the retainer agreement – that before scheduling depositions, hiring experts, or spending your money, that anything over a certain limit must be cleared with you. Also, make it clear that you do not expect to be billed for the occasional, “So, tell me how’s my case coming,” phone call.
Recognize that the large law firms can provide excellent representation, but that despite all the lovely wood paneling and nicely dressed people, law is a business where a lot takes place out of your sight. That invites abuse. The fact that I was urged to not write this piece says something.
Understand the reality of a large law firm practice – the billable hour is the Holy Grail – but even a sole practitioner can pad a bill. Examine every bill carefully, and if you have doubts about excessive or unnecessary charges or services, it could very well be worth having the bill reviewed by another lawyer, for a reasonable fee, naturally!
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.