May 07, 2017
Five Surefire Ways to Annoy Your Clients and Avoid Getting Paid: Billing Insights from Marin’s Top Fee Arbitrator
May 07, 2017
By Toussaint Bailey
My discussion with Scott Lueders, Chair of the Marin County Bar Association’s Client Relations Committee, began as an interview about the mechanics of the MCBA’s Fee Arbitration Program, but quickly turned into an enlightening conversation about the shockingly high number of lawyers who manage to anger their clients and jeopardize fee collections with poor billing practices. Scott, a certified family law specialist by day, may be the most qualified person to discuss billing practices in Marin County bar none.
Although participation in MCBA’s Fee Arbitration Program is always voluntary for clients, it is mandatory for an attorney once commenced by a client. The fee disputes come in all sizes and cover almost every area of law practiced in Marin County – everything from family law to commercial litigation. The fee arbitration is binding if the parties mutually agree to elevate it from the nonbinding default. As Client Relations Committee Chair, Scott reviews and approves each fee arbitration decision.
With his experience as a member and now Chair of the committee, Scott is the perfect person to discuss how to bill in Marin County, or more accurately, how not to bill in Marin County. What follows are a few of the main culprits Scott has seen in fee disputes. These billing practices tend to leave clients feeling displeased and risk lawyers not getting paid the full value of their work.
1. Irregular Billing Cycles
Lawyers raise the risk of ending up in fee arbitration when they allow too much time to elapse between performing a task and generating a bill. Instead of billing a client on a monthly basis, the lawyer allows two months, three months, or even six months to pass between billings. In these circumstances, it is certainly possible that the lawyer carefully recorded his or her time contemporaneously, but the client and the fee arbitrator are left with the impression that the times shown are estimates or best guesses made long after the fact. Plus, nobody likes getting a surprise bill.
2. Block Billing
“Block billing” is the practice of assigning one time charge to multiple, separate tasks. An extreme example would be a bill mailed to a client at the end of the case with a single entry for 200 hours for “work on case” without identifying, among other things, the various individual tasks performed, who performed them, and when. A more subtle example would be a 3.6 hour charge for “review client’s e-mail, retrieve file, call with paralegal re same, and prepare/send reply.” Block billing hides accountability, whether inadvertently or intentionally. It leaves a client unable to determine how much time any one specific task took, which makes it more difficult for the client and fee arbitrator to assess the reasonableness of a given charge. Block billing can also inflate the time a lawyer takes to complete listed tasks by camouflaging, among other things, breaks, personal calls, and non-compensable administrative tasks.
3. Undetailed Task Descriptions
While block-billed entries are vague as to the amount of time allocated to each listed task, some bills are problematic because they are vague in their description of the tasks themselves. In many fee arbitration cases, it is fairly clear that the lawyer has done the disputed work, but the arbitrator is unable to award fees because the lawyer has not sufficiently documented what he or she did. The arbitrator’s analysis focuses on those facts that tend to demonstrate the accuracy or inaccuracy of the information contained in the bills. The more general the task description, the more likely an arbitrator is to conclude that the amount of time billed for it is merely an estimate. Furthermore, imprecise or unnecessarily cryptic task descriptions tend to indicate, at best, inaccuracy or, worse, fee inflation.
4. Inadequate Explanation for Staffing Decisions
Tasks involving more than one lawyer, paralegal, or support staff from the same firm at the same time present particularly thorny billing issues. While it is generally accepted that more timekeepers on a case increase the amount of the bill, in a fee arbitration the burden of proof may be placed on the lawyer to demonstrate that the disputed matter or task was properly staffed. If the need for extra staffing is not evident from the nature of the case (e.g., complex or significant case, large amount in controversy, litigious opposition), then task descriptions should demonstrate the value added by each staff member. Clients and arbitrators will be particularly scrutinizing bills that show a lawyer participated in a matter for only a brief period of time with entries that reflect “get up to speed” activities, such as “review file” or “research background facts.”
5. Bills Indicating the Lawyer's Time was Reconstructed Not Recorded
Aside from imprecise time allocations (block billing) or vague task descriptions, there are a few other red flags fee arbitrators may home in on when analyzing bills. Bills with several time entries of large whole numbers (e.g., 8.0, 9.0, or 10.0) indicate estimates rather than actual time spent. Unless the event involved is an inherently extended activity, such as trial or a day-long deposition, these types of entries may be met with skepticism by fee arbitrators.
Similarly, repeated canned descriptions of work may attract extra attention from a fee arbitrator. Entries such as “review file,” “research,” “discovery,” or “trial prep” are not only too generalized to impart useful information about what work was performed, they tend to indicate hastily prepared bills that reflect reconstructed attorney time rather than recorded time.
According to Scott, good billing practices really come down to communication. One of the biggest triggers leading to a fee arbitration is lack of communication from lawyer to client. Bills themselves are an important, perhaps the most important, communication a lawyer has with the client. Since joining the MCBA Client Relations Committee, Scott has become much more descriptive in his bills. He is more conscious about using his bills as a means to communicate to the client what happened on a particular matter and why.
For more on billing best practices and fee arbitration, see California State Bar Arbitration Advisory 2016-02 (Analysis of Potential Bill Padding and Other Billing Issues), MCBA Client Relations Committee’s Rules of Procedure for Fee Arbitrations, and California Business and Professions Code sections 6200-6206 (Arbitration of Attorney’s Fees).
Toussaint S. Bailey is a partner in Richards, Watson & Gershon's Litigation Department. He specializes in civil litigation on behalf of both public agencies and private clients. Over the years, Toussaint has expanded his service to clients beyond the pre-litigation and litigation contexts. He now guides numerous clients in an advisory role and he recently served as interim general counsel for a mid-sized corporate client.