The Law of Embellishing Returns : ABA Guidelines Seek to Stop Overcharging by Attorneys

Do lawyers cheat on their bills?

“Until recently, dishonest billing by attorneys was the ethical violation that dared not speak its name,” William Ross of the Cumberland School of Law at Samford University in Birmingham, Ala., wrote last year in the Journal of Southern Legal History.

But, he said, “as economic pressures in the legal profession have driven up the number of hours that attorneys bill, time-based billing has been assailed for encouraging inefficiency, excessive litigation and fraud.”

In 1991, Ross surveyed 272 private practitioners and 80 corporate in-house lawyers about billing practices. More than half said lawyers “frequently” or “occasionally” padded their hours.

According to the survey, some lawyers actually billed clients for work that was never performed. But “time-based billing may tend to encourage inefficiency even more than fraud,” Ross found. Hourly billing “diminishes incentives for expeditious work” and encourages attorneys “to proceed with work that they otherwise might not have performed.”

“I don’t see a lot of bill padding from outside counsel, but I see task padding--doing more work than is really needed,” said Daniel Hapke Jr., vice president and general counsel of General Dynamics Corp.’s Space Systems Division in San Diego.

In December, the American Bar Assn.’s Standing Committee on Ethics and Professional Responsibility issued a “formal opinion” on “Billing for Professional Fees, Disbursements and Other Expenses.” The committee roots its guidance in the principles set forth in the profession’s ethical code.

Some issues addressed:

* A lawyer should not bill more than one client for the same hours, as when he or she does work for one client while traveling for another.

* If a lawyer is able to “recycle” work product, such as a research memo, for the benefit of another client, he “is obligated to pass the benefits of these economies on to the client.”

* Lawyers should not add a charge to expenses passed along to clients. “The lawyer’s stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services,” the opinion says.

Ross called the ABA opinion “a significant first step toward clarifying the ethics of billing.” But, he said, “there will still be many ambiguities.”

Many lawyers insist that unethical billing practices are the exception. “Good lawyers have clients’ best interests at heart,” says a partner in a large Chicago law firm.