Like a sick person, a company facing litigation is willing to spend big bucks to get out of a trouble.
It's entirely justifiable, and lawyers are only too happy to oblige, billing clients for every minute worked, and then some.
But is it possible to get sound counsel from someone who just pulled 52 all-nighters in a row? How about paying more than $1,000 for an hour of legal advice? And what about being charged for 26 hours in a single day?
Like all consultants, some lawyers find questionable ways to squeeze money out of clients. Some are legal, some aren't, but all will make a CFO's blood boil.
So review those invoices, make sure you know billing rates, and kindly remind Dewy, Cheatem and How LLP, that summer associates don't need to stay in VIP suites at the Four Seasons.
To remind you of the dangers, we've updated an article from our archives by Lawrence Delevingne and Gus Lubin. Here's what to watch for:
Billing two clients for the same hour of work is dubious legally and ethically. That doesn't mean it's uncommon.
More than one-third of American lawyers admitted to occasionally double-billing clients in a 2007 survey from Samford University's Cumerland Law School. According to the study, the percentage of attorneys who believed that the practice was unethical fell from 64.7 percent in 1995-96 to only 51.8 percent in 2006-07, even though the practice has been condemned by the American Bar Association and most legal commentators.
One egregious example is of a Long Island lawyer whose claims in government legal bills included working more than 1,200 days in a year and claiming to be a full-time employee of five different school districts, according to the ABA Journal.
Padding hours is a basic building block of consulting billing excess.
Work for ninety minutes? Call it two hours. Forget how long you worked? Call it five. Avery Tolar, Gene Hackman's character in The Firm, sure made it work.
According to the Samford study, "a distressingly high percentage of attorneys believe that time-based billing results in bill padding and provides incentives for attorneys to perform unnecessary work." Two-thirds of the respondents stated that they had specific knowledge of bill padding.
For example, an extensive Illinois hearing board investigation into the billing records of a lawyer at Mayer Brown found that he billed more than 150 hours during a two-week period in which he actually worked less than 50.
The lawyer's routine was to arrive at the office around noon, stay until the other lawyers went home around 5, and then go home himself soon after — while claiming to stay at the office until late in the night. When he was in the office, investigators found, the lawyer made edits to documents at a rate somewhere in the range of one edit per hour.
That's the more common version of over-billing, as opposed to the notorious 1990s example of an energetic Cravath attorney who billed 26 hours in a day, according to the Washington Monthly.
Are you paying for your lawyer's air conditioning? Michael Vick was.
Faced with a $2.66 million fee for a bankruptcy case, Vick learned that his lawyers were charging for extensive overhead expenses. As Am Law Daily noted, these included the cost of running air conditioning during the weekend; taxi rides home for employees working late; and $1,200 for plane tickets from New York to Kansas.
Cromwell & Moring also billed the quarterback for an incredible number of hours — 7,200 billable hours of work over ten months, equivalent to working 24 hours a day on the Vick case for 300 straight days.
Vick's fee was subsequently reduced by a disapproving judge to $1.5 million.
Sometimes, law firms use high billing rates to stick clients with unnecessarily expensive bills for research, secretarial work, and other low-level tasks.
For example, a federal judge scolded Richards Kibbe & Orbe after a firm lawyer billed $325 an hour to review an estate landscaping plan and used a $190-an-hour paralegal to deliver a letter to court, according to the Bergen Record. Why not just use FedEx? the judge asked.
Expense reports can be great opportunities to practice greed — er, billing creativity. You might claim reimbursement for the cost of first-class tickets when actually you flew coach. Or you could claim reimbursement for plane tickets, hotels, and meals when actually you didn't travel at all.
For example, a lawyer at Sullivan & Cromwell used these techniques and others to misappropriate over $500,000 before being disbarred in 2008, according to the Wall Street Journal. Besides outright false expenses, the lawyer admitted to improperly billing for personal "meals, travel and lodging" and first-class tickets on international flights, for which he paid for coach or business-class tickets, pocketing the difference.
Also in 2008, a lawyer at Latham & Watkins pleaded guilty to one count of mail fraud for mischaracterizing more than $200,000 of expenses as reimbursable.
Although fair by the virtues of the free market, there is something wrong about four-figure hourly rates.
According to last year's billing survey by The National Law Journal, the highest billing rate belonged to a partner at Locke Lord's Dallas office at $1,285 an hour.
Meanwhile the highest associate billing rate was $760 an hour at DLA Piper's New York office.
That counsel better be good.
High legal fees often seem like a rip-off, and once in a while, a judge agrees.
In one case of indisputable inefficiency, attorneys tasked with the recovery of billions of dollars lost in the R. Allen Stanford Ponzi scheme recovered only $81 million. According to the AP, the attorneys charged $27 million for three months of shoddy work.
In other words, an unprecedented 34% of the recovered sum would be paid to legal fees. The situation was improved somewhat by a judge, who rejected and withheld about $7 million in fees.
Anytime you pay an upfront fee, you risk the lawyer not doing much or any work.
This was a growing problem in the past year with a high number of foreclosure cases, which often involve initial payments. In a typical case last month, Gladis Heras paid a lawyer to arrange a modification of her mortgage. Months later, her bank had not been contacted about the mortgage, and the lawyer had done his best to disappear, according to the Daily Business Review.
Thankfully, he was arrested after receiving dozens of complaints related to negligence and abandonment.
Sometimes, law firms charge clients for developing talent.
Recently, Tuckerbrook Alternative Investments sued Bingham McCutchen, claiming the firm stacked a case with young associates who had “inadequate” experience. “The billing statements reflect that these junior lawyers in essence were enjoying the benefits of on-the-job-training at Tuckerbrook’s expense,” the complaint states, according to Above the Law.
Working while sleeping
Even if clients believe the super-human hours lawyers sometimes bill, it's hard to believe any counsel coming from someone who hasn't slept in days is worth much.
One extreme (if-dated) example was a partner at Chicago's Chapman & Cutler, James Spiotto, who charged clients for more than 5,471 hours in a single year – about 15 hours a day, every day.
Called "possibly the hardest-working lawyer in America" by his colleagues, Spiotto claimed to have pulled 52 all-nighters in a row in 1993, working on bankruptcy matters, according to the Washington Post.
Why do lawyers abandon their clients? ›
Lawyers can withdraw based on the fact their client refuses to be truthful, refuses to follow the attorney's advice, demands to pursue an unethical course of action, demands unrealistic results, desires to mislead the Court, refuses to cooperate with their counsel as well as countless other reasons.What are the four areas of unethical billing practices? ›
- Not Keeping Contemporaneous Records. When you're in the groove, it can be tempting to go from client calls into research and writing and just do your billing “later.” ...
- Block Billing. ...
- Vague Entries. ...
- Clerical & Paralegal Work.
However, an attorney's job is to help you through the process of handling your case, not make it more stressful. If an attorney is attempting to scare you into hiring them to handle your case, they are probably exhibiting bullying behavior that can have very negative consequences later on in your case.Why do lawyers drag out cases? ›
Their goal is to drag the case on and pay out as little as possible. This earns more money for the attorney, who gets paid by the hour, and also can help frustrate the plaintiff into making a better settlement for them out of desperation.How do lawyers refuse clients? ›
The decision to decline a representation is best to communicate that declination in writing. "Non-engagement letters" should clearly inform the prospective client that the law firm will not represent the prospective client in that matter and that he or she should not rely on the lawyer for any advice or legal action.Why do lawyers ignore me? ›
Your attorney may be waiting until a deadline is closer to request documents or answer interrogatories. There are no updates to report. Personal injury cases take time and can be slow going in the early stages. Just as your attorney has deadlines, so does the other side of the docket.What is unethical for a lawyer to do? ›
Charging excessive fees, refusing to give the client his or her money, stealing the client's money, or misplacing the client's money are clear indicators of an ethics violation.What is billing abuse? ›
Abuse involves payment for items or services when there is no legal entitlement to that payment and the provider has not knowingly intentionally misrepresented the facts to obtain payment.What are the most common ethical violations? ›
Ethics violations such as discrimination, safety violations, poor working conditions and releasing proprietary information are other examples. Situations such as bribery, forgery and theft, while certainly ethically improper, cross over into criminal activity and are often dealt with outside the company.What do lawyers fear the most? ›
When lawyers are surveyed about what keeps them awake at night, their top issue is almost always a feeling that their offices or cases are out of control.
What not to say to a lawyer? ›
- My case will be easy money for you. ...
- I have already done the work for you. ...
- I forgot I had an appointment. ...
- I've already talked to a lot of other lawyers. ...
- I don't have all my documents.
The attorney-client privilege is a rule that protects the confidentiality of communications between lawyers and clients. Under the rule, attorneys may not divulge their clients' secrets, nor may others force them to.Does my attorney have to give me my file? ›
The file should be handed over immediately upon request. If the attorney's fees are paid in full, the attorney cannot hold the file back for the cost of any copies that the attorney has made, because the attorney cannot charge the client for these copies.Why do lawyers constantly object? ›
Lawyers generally object for one of two reasons. First, we object because we don't think the question asked of a witness is proper. Second, we object because we don't think the answer the witness is giving is proper.Why are lawyers so slow to respond? ›
Your attorney may not be able to respond to you right away because they're dealing with another client's negotiations or trial. Being busy with another client isn't an excuse to completely fail to respond to another client.Can a lawyer be rude to client? ›
Rudeness isn't necessarily illegal
That doesn't excuse bad behavior, but it also doesn't mean that your attorney isn't putting their best efforts into your case. Most attorneys have an intake process where they decide if they want to take your case or not.
A criminal lawyer can still defend the client by arguing that the evidence does not prove the elements of the offence beyond reasonable doubt. If the client gives evidence denying guilt or makes a statement claiming their innocence, the solicitor must stop acting for them.How do lawyers say no? ›
Try “I'm not able to do that,” or “Sorry I can't help you,” or “Not this time, thank you.”When can a lawyer refuse to represent someone? ›
An advocate shall refuse to represent any client who insists on using unfair or improper means. An advocate shall excise his own judgment in such matters. He shall not blindly follow the instructions of the client. He shall be dignified in use of his language in correspondence and during arguments in court.When an attorney does not respond? ›
If your lawyer does not return your call, send them a letter and keep a copy. In the letter, describe what is bothering you and what you need. Suggest meeting with the lawyer face-to-face. Your next step would depend on the nature of the problem.
Why can't lawyers Date clients? ›
A sexual or intimate relationship started after the commencement of the legal representation has at least the reasonable possibility of adversely influencing the lawyer's judgment, creating a personal conflict of interest, and allowing the lawyer to use client confidential information for the lawyer's personal ...When can a lawyer withdraw his services to the client? ›
A lawyer may withdraw his services from his client only in the following instances: (a) when a client insists upon an unjust or immoral conduct of his case; (b) when the client insists that the lawyer pursue conduct violative of the Code of Professional Responsibility; (c) when the client has two or more retained ...