Overbilling is Billing Fraud and It Hurts Us All
John Conlon just wrote an excellent piece on lawyer overbilling at Claims Magazine's website. His July 8, 2009, article, entitled Fleecing the Golden Goose: Why Insurers Need a Defense to Overbilling Lawyers, discusses how some defense firms openly attempt to defraud their clients by overbilling, and how clients can try to stop them. The fact that such practices are considered "business as usual" in some circles should make all of us wonder what has happened to our profession's ethical standards and our sense of client service.
In his article, Mr. Conlon notes that defense attorneys not only routinely overbill, but many consider practices such as double billing to be perfectly ethical. Mr. Conlon cites to the results of surveys conducted by respected overbilling expert William Ross showing that attitudes about overbilling are moving in the wrong direction:
...the percentage of attorneys who believed that "double billing" was unethical fell from 64.7 percent in the 1995-1996 survey to 51.8 percent in the 2006-2007 survey. (To view past survey results on lawyer billing abuses, click here.)
Mr. Conlon goes on to discuss the tools available to clients for monitoring invoices and flagging suspicious time entries. He recommends three methods available to clients to prevent overbilling -- hiring only reputable lawyers, securing lower hourly rates, and having solid litigation plans. He notes, however, that clients who secure discounted rates often find their lawyers padding their hours to make up the difference. Mr. Conlon then provides an excellent overview of some of the tools available to clients to identify and stop unethical billing practices. These include imposing very clear guidelines, implementing e-billing programs, and carefully reviewing bills.
While Mr. Conlon's article provides some great solutions to the problem of overbilling, the mere fact that clients must put processes in place to catch their own lawyers is a sad testament to the state of our profession. Clients retain lawyers to protect their most important interests and keep their deepest confidences. Clients make very important decisions based on the advice we give them. It is truly lamentable that the other end of this trusting relationship is a game of cat-and-mouse where lawyers try to defraud their clients and clients try to catch them.
You can dismiss these practices as the work of a few unscrupulous lawyers. But fraudulent billing in the legal profession damages all of us. Don't think so? When I first started practicing, the firm would send the client a one-line invoice with a lump sum that read, "For Professional Services Rendered." Imagine the trust that those clients had in their outside counsel. Now try to imagine your client having that same level of trust in you.
Used properly, forms and checklists are powerful efficiency tools. Form discovery gives associates and paralegals a solid foundation from which to craft case-specific requests. As lead counsel, you can rest assured that you will obtain the basic information you need in every case -- but only if your form discovery is well-crafted in the first place. The cost-conscious litigator should invest significant time in drafting the “perfect” set of form initial discovery. The form is only the starting point. Your team members and you still need to customize each set for each matter. The "perfect" set of form discovery garners significant efficiency gains up front by allowing the team to focus on only those revisions and additions necessary for each particular case. To maintain these efficiencies, lead counsel needs to periodically update the forms. Times change and the discovery must change with it. For example, form discovery requests generated only three years ago might not include requests for MySpace or FaceBook information. Court rules get amended and cases get handed down. The cost-effective attorney is the one who manages this tension between keeping hours low with forms and keeping quality high with customization and updates. 
Imagine you need to hire a courier service for your law firm. A business associate gives you a name, and you call the courier in for a meeting. He tells you he is the best courier in the business. You ask how much to deliver a package across town. This is where is gets weird. He says he can't tell you. It's too unpredictable. He could get caught in traffic. The recipient office could be closed, and he may have to go back twice. He might have other jobs that day. But, he says, if you agree in advance to pay him whatever it ends up costing, he'll send you an invoice after he does the job. You, of course, are outraged. Does he not know his business? Does he not know his overhead so he can calculate a fair price? You throw him out of your office and call someone else. 
