10. Double billing
In the last chapter, I talked about multiple meters when lawyers caucus. However, by “double billing” — the title of this chapter — I refer to something different. I’m not talking about two lawyers both billing for time spent together. Rather, I’m talking about one lawyer trying to extract 120 minutes out of a single hour when two clients are involved. The question is whether this can be justified.
One task for two clients
A classic example is when a lawyer has two clients with aligned interests in the same matter, each of whom is billed separately. Nothing wrong with that (assuming that all the rules about conflict letters and waivers that apply in the particular jurisdiction have been observed).
But assume, for example, that the lawyer has a one-hour telephone call with opposing counsel discussing matters that implicate both of the clients’ interests. Does the lawyer then bill each of the clients for an hour? Or is the bill split, so that each client only pays for 30 minutes?
Personally, I think the ethical answer should be obvious. Lawyers who bill by the hour — on the basis that time is the commodity they are selling — cannot have their cake and eat it.
If clients were billed by value — as opposed to by the hour — then the value given to one client would not be diminished by the fact that similar value was being given to another. Value is not a finite commodity, which has to be sliced up. Unless a fee agreement provides otherwise, there is no inherent reason why Client A should pay less just because Client B is also benefiting — or vice versa.
Time, by contrast, is finite. It cannot make intellectual or ethical sense for a lawyer billing by the hour to charge the same hour to more than one client — even in a scenario where both clients benefit from that hour. The bill should be split.
Double billing the same time for different tasks (1)
Above, I talked about a scenario where two clients were billed for the same task in a given matter. Another variation of double billing involves billing the same time on unrelated tasks.
Assume, for example, that a lawyer goes to court for hearings on two unrelated matters in front of the same judge, both on the same calendar. The lawyer leaves the office at 8:00 AM for an 8:30 AM calendar. Client A’s matter is called at 8:50 AM and concludes at 9:00 AM. Client B’s is called at 9:15 AM and concludes at 9:20 AM. The lawyer is back in the office at 9:50 AM.
How does the lawyer charge the two clients? One would hope not by charging both for the entire time from leaving the office to returning. A 50-50 split would seem fair (although, arguably, Client B benefits more than Client A in the above example, because its full bill would have been higher).
Double billing the same time for different tasks (2)
Here’s another example. Picture a lawyer on a flight from JFK to LAX on a business trip on behalf of Client A. And let’s assume the lawyer is in Business or First Class (meaning that work is reasonably feasible in terms of the physical and mental space).
Let’s put aside the issue of how travel time should be charged in general (I’ll be getting to that in the next chapter). The issue to focus on now is this: What if — after swilling a glass of Chardonnay and deciding that the movie isn’t worth watching — the lawyer pulls out a notebook computer and works on a document for Client B?
Let’s assume that the lawyer was already charging Client A for the trip. Realistically, if Client A was willing to pay not only for travel expenses but also for travel time, it did not necessarily expect the lawyer to work on its behalf throughout the entire flight. That’s not what people do on long flights. Client A probably wouldn’t have minded if the lawyer had watched the movie.
But would Client A be happy about having the lawyer work for Client B on its dime? And is it fair to Client B if the lawyer bills it for work done during time that Client A has already paid for?
Under systems where lawyers bill for value and not simply for time, these questions wouldn’t arise. No one would have bought the lawyer’s “time,” only the lawyer’s services. And the client has no interest in where or exactly when those services are performed, so long as they are done within the required deadline and to the expected standard.
But it is the legal profession that has, collectively, rallied around and profited from the concept of selling time as its commodity — and so it has to deal with the practical and ethical issues that arise under scenarios such as the one just described. It can’t just ignore these issues and fall back on a “value to the client” argument when it suits it.
Of course, in reality, Client A would never know that its lawyer worked for Client B on that flight. Likewise, Client B, when it received the bill, would never know that the work was done on a flight — let alone on a flight taking up time for which Client A was already paying.
So it comes back to the honor system. And the problem is that in an age when lawyers are under huge pressure to rack up those hours — something I’ll be coming to shortly — the need to do the “right thing” is in tension with the burning incentive to record time.
Lawyers who admit to double billing
Thus, the lawyer on that airplane could choose to double bill for the time and very likely get away with it. Likewise, the lawyer going to court for two hearings. And there is some evidence that this is exactly what a lot of lawyers choose to do.
In 2007, William G. Ross, a professor at Samford University’s Cumberland School of Law, published a survey of billing practices in which he polled 5,000 attorneys from various walks of life throughout the country and obtained 251 responses.
Professor Ross reported that the percentage of attorneys who admitted that they had double billed was 34.7%, compared with 23% when he conducted a similar survey about a decade earlier. Moreover, only 51.8% regarded the practice as unethical in 2007, as compared with 64.7% in the earlier survey. (Professor Ross has also written a book titled, The Honest Hour: The Ethics of Time-Based Billing by Attorneys (1996, Carolina Academic Press). His Web site, which includes details of the attorney-billing surveys referenced above, is at www.williamgeorgeross.com.)
The lawyers who do double bill in this manner might rationalize it internally by telling themselves that nobody is really worse off. Client A was happy to pay for that time, anyway. Client B was happy to pay for that work, anyway. So where is the harm?
Well, the harm is that the lawyer is, at some level, getting away with something. And that, ultimately, isn’t good for the practice of law, in general — or for the attorney-client relationship, in particular.
Entire contents © 2008 John Derrick