May 9, 2009 (Original publish date) • By Dennis Beaver
Last week, we told you the story of a law student with a part-time job in a San Francisco law firm. He discovered lawyers were performing unnecessary and costly legal services after clients told them to stop all work.
When an attorney does work merely to run up the bill, this can result in criminal prosecution and the loss of the license to practice law.
Here, someone found out — a gutsy law student who we put in touch with the State Bar of California. But if you think these kinds of billing practices are extremely rare — think again.
“While not an every-day event, we do get calls like this from legal secretaries, paralegals, law clerks, and lawyers who have uncovered the same thing in their own firms,” a State Bar investigator told me. “It is reassuring to find many people in law who will not tolerate illegal activity in their own offices. We accept anonymous complaints and do investigate,” she told me.
Obviously, ethical lawyers do not victimize their clients, and I believe that most lawyers do not play overly fast and loose with their bills.
The real problem is that so much legal work can be done out of the client’s presence, it can be difficult to know the time really spent.
The real question: “How can I reduce the chances of either a billing dispute or becoming a victim of inflated or downright fraudulent billing practices?”
I put that to a couple of lawyers who have written extensively on this subject and also maintain an interesting Web site: Calattorneysfees.com – blog. They are Marc Alexander and Mike Hensley, who practice in Santa Ana.
Their work deals with auditing attorney’s bills — determining if they are reasonable. This has put them in a key position to see what happens when clients understand the power of one document: The retainer agreement.
“It’s your contract with the attorney, setting out the scope of services to be performed, and payment terms the client accepts. Where legal services are expected to exceed $1,000, the law requires a signed, written retainer,” Attorney Alexander points out.
“Most clients do not realize that a retainer is not a take it or leave it matter. When you are handed a retainer to sign, take the time to read it. If you need time to study it, or want family members to look at it before signing, most lawyers will have no problem with that suggestion. But if a lawyer refuses that request, find another lawyer,” he stated.
“It is extremely important to understand that clients always have the right to negotiate, modify, or insert language in this contract-terms that are important to them. Especially if your case could become complicated and expensive, just as you would in having your home remodeled, you need to look at ways of placing controls on how money is spent.”
“Suddenly receiving a $5,000 bill for a deposition with no idea it would cost that much, or if it was necessary, is enough to raise anyone’s blood pressure. To prevent surprises, it is reasonable to require an explanation why a deposition is needed and for your approval plus a cost estimate, well in advance. You need to establish a budget, and insist on being told when it is being used up. In short, you have to monitor your bills, and provide for that in the retainer agreement,” Mike Hensley added.
“Don’t just pay the bill. Look at items, the time put in, and if you have questions, call the attorney and discus it while the issue is fresh. You want bills in a detailed manner, for example, in tenths of an hour.”
“Watch out for block billing. This is where you have a string of activities and then one time entry, such as: Review and analyze pleadings, first draft of XYZ, prepare document for filing — total six hours. This kind of bill makes it impossible to determine what tasks were performed and how much time was taken per item. It is an invitation to bill padding,” both lawyers stressed.
Next time — Developing a better relationship with your lawyer. The importance of being proactive.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.