How times have changed: a systematic approach to billing.

• Author: Malamud, Brad
• Position: For legal services

Once upon a time, when a law firm resolved a matter and concluded its representation, it simply mailed the client a bill, which usually consisted of an amount preceded by a one-line description: "For Services Rendered." But today, in all but a few instances, law firms prepare elaborate bills periodically during representation, often monthly or quarterly, providing detailed descriptions of all services.

The current billing procedure used by most law firms at their client's request is simple enough to summarize. Each biller records the time expended for a given task along with a description of the services rendered. Once a month, these billing entries are gathered, and internal pre-bills are printed. A supervising attorney reviews them, editing descriptions and time charged. Some supervising attorneys take this step seriously and perform a detailed review of fee and cost billing. Others simply send the bill to the client unaltered, thereby potentially breaching the duty imposed by the first sentence of Rule 1.5(a) of the American Bar Association Model Rules of Professional Conduct: "A lawyer's fee shall be reasonable."

Lawyers and law firms can avoid the litigation and notoriety that arises from billing disputes by carefully describing the hours expended and costs incurred on the client's behalf. Failure to record time accurately and to describe the work performed sometimes causes a client to lose confidence and occasionally engenders continuing disputes.

Client Complaints

Clients voice concern over fees and costs that appear excessive, unreasonable, duplicative or unnecessary. When a concern arises, clients usually request the supervising attorney (and possibly other billers who worked on the file) to justify the work and expenses. Many client complaints associated with perceived overbilling can be eliminated if attorneys follow the suggestions below, but this article does not address instances of improper case management and overstaffing, which are common causes of overbilling.

Clients often are frustrated by billing statements from which they can neither determine what work was performed nor why it was justified. This frustration most frequently occurs when a biller:

* Provides inadequate billing descriptions;

* Uses minimum billing increments (for instance, quarter hours) that overstate the actual time expended;

* Pads time (bills time greater than the time actually expended);

* Stacks repetitive, non-descriptive billing entries;

* Repeatedly employs identical billing descriptions without identifying any specific work performed;

* Bills for work that should fall within his or her expertise (evident when a client is billed for the training of junior attorneys or paralegals); or

* Duplicates the effort of another biller.

What philosophy should the supervising attorney employ to eliminate billing problems?

Solution is Simple

The goal of every biller should be to conform descriptions of services rendered to the standard established in California for so-called Cumis independent counsel in Center Foundation v. Chicago Insurance Co., in which the California Court of Appeal stated that counsel must be "willing to engage in ethical billing practices susceptible to review at a standard stricter than that of the marketplace."(1)

The worst billers might be anywhere in a law firm - paralegals when performing clerical or repetitive activities, recently admitted attorneys when provided with little guidance as to proper billing descriptions, or even senior partners who no longer themselves perform routinized tasks but instead supervise other lawyers, billing their work as "analysis," "discussion," "conference," "planning" or "receipt and review."

All billing professionals should adhere to two general rules. First, record all time on the day the work was performed.(2) Second, use precise work descriptions.

Single-task Billing

Each billing description should describe one task. Each new task requires a new billing description. If a biller performs several related tasks for the same client on the same day, each task should be fully described and maintained as a separate entry. A client should be able to see clearly the length of time devoted to each task. When a biller lumps together descriptions of separate tasks under one entry - "block billing" - it becomes impossible for anyone later to separate out how much time was spent on each task.

Block billing should not be used.(3) To give an example. If in one day, a biller spends four hours preparing a brief and four hours attending a deposition, these two tasks should be separately billed, even if they are performed for the same client. Working on six motions in limine in one day involves closely related but separate tasks. Lumping the unrelated tasks together within one description and billing eight hours for the work performed would qualify as block billing.

Accurate Descriptions

In In re Fine Papers Antitrust Litigation(4) the federal district court refused to allow compensation for "hundreds of hours which were described by vague or meaningless terms or insufficiently documented." In Grendel's Den Inc. v. Larkin[5] the First Circuit held that the absence of detailed contemporaneous time records, except in extraordinary circumstances, "will call for a substantial reduction in any award or, in egregious cases...