Unethical (But Entertaining) Legal Billing Stories

Everyone makes mistakes, including law firms. However, as corporate legal departments continue to tighten their belts, legal bills are coming under greater scrutiny. Here are some examples of questionable yet common legal billing practices and how courts viewed them:

Vauge Descriptions

Firms need to provide complete, detailed, and accurate task descriptions To prevent a client from flagging the bill. A time entry should describe how the task adds value to the case and justify why the task was required. In Klebe v. University of Texas Health Science Center, the plaintiff requested reimbursement for legal fees totaling $422,604.04 and expenses amounting to over $22,000. After reviewing the billing records submitted by the plaintiff’s attorneys, the court deducted 15% of the time because the attorneys failed to describe tasks sufficiently. In addition, the court found that not one entry was “longer than a line of type.” It disallowed numerous unspecified and unreasonable expenses, including $642.81 listed under the category meals. “Simply because an attorney is working through lunch, or has dinner brought in, does not mean the expense is reasonable or necessary to the case.”

Overbilling

Most lawyers bill their time honestly, and overbilling never occurs to them, or they resist the temptation to do so, and some record less time than they spend on a matter. However, overbilling among attorneys remains a problem. For example, in September 2022, a former Dentons litigation attorney in Chicago falsely claimed billing hours on a document review project, despite not performing most of the work. The lawyer was accused of creating false billing entries and misrepresentations after he falsely claimed that he reviewed 425 documents for a client. He recorded approximately 277 hours of time for doing so, even though he later admitted that he had only reviewed or opened about 20 of them.

Bill Padding

Billing for legal research involving something they clearly must have already known, based upon academic training and practice, is considered a form of bill padding. Here’s an example: Suppose the head of a small educational foundation asked a lawyer with a Master’s degree in taxation who works with tax-exempt organizations if his organization could donate some funds set aside to send students on educational trips to organizations that help refugees – and still maintain their charitable tax exemptions. After promising to do some research, the attorney billed the client $85 for the one-minute phone call, nearly $800 for two hours of research, and over an hour to “review” his research. He defended his billing practices by saying he had to spend this time researching this “complicated issue,” and the client responded: “What research? Shouldn’t an attorney who holds himself out as working with tax-exempt organizations know the answer to that question already? I Googled our question and found the answer in less than five minutes!” 

Phantom Hours

Deliberately billing clients for work never performed seems like a no-brainer. However, it still happens. Last year, disbarred attorney Matthew Elstein pleaded guilty to charges that for four years, he billed his clients for legal services never rendered and expenses not incurred, sent them fake court orders, settlement agreements, and other documents to falsely inform them that he had settled the cases in their favor. In June 2016, Elstein told a corporate client that they had won a $52 million default judgment – and gave them a fake court order with a forged signature as proof – even though he never filed the lawsuit. Although Elstein said a degenerative brain condition was responsible for his scam, the judge didn’t buy it, and he was sentenced to 37 months in federal prison.

Block Billing

Billing time for multiple tasks in large blocks is another red flag for clients.  In February 2022, a judge ruled that Nike could recover only about 30 percent ($260,000 of $856,000) of the legal fees paid to Boies Schiller Flexner for assisting New York federal prosecutors in charging lawyer Michael Avenatti with attempting to extort money from the company. The reason: block billing prevented separating recoverable expenses from nonrecoverable ones. For example, Schiller recorded an hour of time for evaluating Avenatti’s response to a subpoena letter, discussing the letter with Nike, and sending email “correspondence with SDNY.” In another entry, the firm billed Nike 2.8 hours for time spent reviewing a motion, prior productions, and “meeting notes to provide a response to SDNY.”

Billing for Billing

Attorneys grow tired of explaining their billing practices, perhaps rightfully so, but they must answer billing questions – free of charge. Suppose an attorney asks, “Whenever my client gets a bill, he calls to question each of my time entries, keeping me on the phone for 30-45 minutes each time. May I bill him for this time?” Although a lawyer has a duty to comply with reasonable requests for information, this does not entitle them to bill clients for billing questions. Like it or not, clients have every right to question the charges contained in their bills, and when they do, attorneys must be prepared to answer them. The scope of billable tasks should be addressed upfront in the retainer agreement - billing for billing is one way to invite a legal malpractice claim.

Why You Need Third-Party Legal Bill Review

The emphasis on legal fees has created an industry focused on reviewing and analyzing legal services for discrepancies, unethical billing practices, and billing mistakes. These legal bill review services ensure that each line item adds reasonable value but also because they can negotiate bill adjustments when necessary – which allows in-house teams to avoid tough billing conversations with their law firms.

 If your legal department doesn’t have the time to go through legal bills with a fine-toothed comb and confronting your third-party firms with billing issues makes you extremely uncomfortable, let LegalBillReview.com do it for you. To find out how it works, contact LegalBillReview.com today.