Lawyers bill for their services in a variety of ways. Plaintiffs’ personal injury lawyers usually bill on contingency. And some cases are billed by the task. But billing by the hour is still the primary way lawyers charge for legal work.
To the neophyte, a “billable hour” should be equal to one regular hour. But in practice it doesn’t always work that way. Lawyers record their time in a variety of ways. And under some of those ways a “billable hour” becomes significantly more than an ordinary hour. The length of or number of billable hours recorded is not directly governed by the Oregon (or other) Rules of Professional Conduct (RPC). Instead, RPC 1.5 forbids lawyers from charging a “clearly excessive fee.” “A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.” The rule then lists a number of factors that the lawyer of ordinary prudence should consider in making this decision.Thus, it is at least allowable for a “billable hour” to be different from a regular hour so long as the fee is not “clearly excessive.”So, how do clients control lawyers so that they don’t abuse this flexibility. Clients should look out for inflation and control the terms on which their matters are billed through a retainer agreement.
A retainer agreement with the lawyer sets forth the terms on which the lawyer will represent the client. A good retainer agreement should specify the terms on which the client’s work will be billed. Well-regarded firms have standardized retainer agreements, and it should be a red light to a client if the firm does not propose one. Assuming that the firm does propose a retainer agreement, I recommend that the client not take it at face value. The client should review it as in the case of any contract.And negotiate acceptable terms before agreeing. So, what are the ways that bills become inflated, and how does a client negotiate to avoid inflation? The following are several points to consider, but may not be a comprehensive list.
- No Double Bites. Billing for fractions of an hour presents an area that needs to be watched. Most lawyers now bill in tenths of an hour. But some firms have a policy of billing at least two tenths of an hour for any work, however minimal. Clients should not agree to that, instead insisting that the minimum billing should be one tenth.
- No Quarter Hours. Another issue is whether billing is done in tenths of an hour or quarters of an hour. With quarters of an hour, doing a group of small tasks for many clients quickly adds up. Associates at another firm I came to be familiar with referred to this as “dialing for dollars.” In my opinion, clients should always insist on billing based on tenths of an hour and forbid the use of quarter hour billing. Otherwise, the bill will be inflated.
- Detailed Descriptions. My first firm billed some clients with the simple notation “For Services Rendered.” The bill did not contain any description of the work done or who did the work. Such was the trust between lawyers and clients! I understand that some New York firms still employ this type of billing, but for most lawyers that time is long past. Instead, legal bills now contain descriptions of the work, but those descriptions can vary drastically in their contents and detail. Left to their own devices, many lawyers will choose a type of billing that reduces detail reported to the client. An example is extreme block billing. Under that approach all work descriptions are dumped into a single entry with a grand total for all time keepers for the day. No effort is made to split out the time by timekeeper, so the client doesn’t know who did the work. Nor does the client have any idea what time was spent on any particular task. I have some additional thoughts on block billing below, but at a minimum the client should require that daily block entries be broken out by time keeper. This will tell the client how much of his or her work is being done by an associate or paralegal rather than a partner, allowing the client to have an idea whether delegation of his or her work is appropriate. The client should also require sufficient detail in the work descriptions to be able to tell what work was actually done by each timekeeper. This is the only way to account for the reasonableness of the time spent on daily tasks. Good lawyers should not object to this approach because it improves communication of the value and nature of their work to their clients.
- Control Conferences and Time Thinking. Lawyers need to think about their cases, which is legitimately billed to their clients. Lawyers also need to talk to one another about case issues, and that time is legitimately billed to their clients. But clients should watch this time because it can become inflated. This is one subject that a client should discuss with the primary lawyer, if time spent on these matters seems excessive. The time billed will probably be reasonable, but it is always worth checking if there is any concern.
- Contemporaneous Billing. Some lawyers are terrible procrastinators when it comes to doing their bills. These lawyers do not record their time as they go. Instead, they try to remember what work they did weeks or oven months after it was done. I knew one lawyer who recreated his billable time months late from pink phone message slips and his calendar. Obviously, such methods are grossly inaccurate. Not only can they result in inflation, but they keep the client from getting a true picture of what work was actually performed. Clients should insist that the lawyers working for them record time and details at or near the time the work is performed. One way to enforce this demand is to forbid out-of-cycle billing. That means no billing of time entries after the monthly bill. In other words, no new entries in December’s bill for June time.
- Consider Forbidding Block Billing. Block billing means that all task descriptions for a single day’s work are listed together, with a total given for all of them. Federal court’s will not, for example, accept this kind of billing. Instead, they require a notation of the amount of time spent on each task. So an entry would be “Outline and analyze risk of liability (.2); telephone to client to discuss the same (.3); etc.” This type of time entry is very inconvenient for lawyers, but it does give the client a precise way to monitor for inflation. Under this approach, the time spent for each task must be reasonable. A client should at least consider whether he or she can use this much detail.
- Control Both Rate and Time. I once heard a municipal lawyer–an area where rates are notoriously low–say that a client can control the rate or the amount of time spent but not both. This statement has always bothered me. If a lawyer agrees to work for $125/hour, that is the rate. The lawyer should not be able to inflate the time so that the rate effectively becomes $150/hour. A client must be attuned to inflation of any form, and be willing to insist that the time correctly be reflected in the bill, no matter what the rate.
Despite trying to control the billing, a couple things need to be kept in mind. First, legal services are expensive. No way exists to avoid that fundamental fact. Good lawyers, though are worth the money, and most are honest and will not intentionally inflate the bill. Second, all these pointers are worthless if the client doesn’t review the bill each month to prevent inflation. Ideally, in any lawyer-client relationship, a good path of communication exists. Talking about the bill is a good way to understand one another and the goals and approach of each.
About Foundation In Law
Over a long career as a practicing attorney, Frank Hammond came to realize many prospective legal clients do not know much about lawyering and lawyers – how they work, how fees are set, and how to deal with them. Beginning attorneys also often have little notion of what actual practice involves. This blog is meant to be a guide for both.
Disclaimer: The Foundation in Law blog is not intended to provide legal advice, and no attorney-client relationship will arise as a result of interacting with this blog. You are advised to consult with your own attorney regarding legal questions. The opinions expressed in this blog are those of the author alone. The author is licensed only to practice in the State of Oregon.