As a great deal of the work lawyers do takes place out of sight, this permits bill padding — charging for work that was never done or at an outrageous and unconscionable rate for that which was performed. Estimates of fraudulent billing run from 21% to over 33%, depending on the research methodology. For many lawyers, the “billable hour” is an invitation to theft.
State bar investigators as well as conversations I’ve had with bar association attorney fee arbitrators have told me that with the glut of lawyers in some areas of the country, complaints of bill padding in recent years have increased. They cited law firms’ excessive bills for attorneys with so-called expert ability when, in reality, some were fresh out of law school.
The Google coincidence
From time to time, both sides of a dispute go to Google, find one of my articles and call our office. I like that, as it gives me a chance to set up a conference call, get them talking and help solve their problem. That’s what happened in this case.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
“Linda” phoned and had quite a disturbing story to tell: “Mr. Beaver, I have read you since I was in high school and need your advice. I am a recent law graduate working for a large real estate law firm, hired at the insane salary of $200,000 because of my father — he is a well-known judge handling complex real estate cases. In law school, I was an average student and took the required one course in real property law — so I am not in any way an expert in the field.
“But in an office meeting with our client, ‘Logan,’ I was introduced as the firm’s resident expert in real estate law with a great deal of experience, in addition to having ‘learned by osmosis from her well-known land-use guru, superior court judge father.’ I said nothing, as I did not want to embarrass my boss, but I felt awful.”
An administrative assistant shows Linda some billings
Linda told me that several days later, an administrative assistant in the firm took her out to lunch, showed her billings sent to Logan and other clients and said, “They are billing your time on these cases — at an inflated rate — and we both know you never even touched their files, except for being in that meeting. This is fraud. I’ve seen it happen before. I am quitting this job at the end of the month, but I do not want to see your career get off to a bad start, so you’ve got to do something.”
Around the time that Linda was getting an eyeful, Logan called my office and told me, “Mr. Beaver, I Googled ‘lawyers padding their bills’ and found your articles.” He described the office conference, “where Linda’s body language was not consistent with someone who felt they even belonged in the room. She was not happy. So, I researched her, finding that she has never had any experience in real estate law. What do you recommend? I do not want to accuse her of theft, but this looks really bad.”
Let’s round up some advice from experts
I said, “Let me get some suggestions from lawyers who deal with these types of issues and set up a conference call with you and Linda.”
So, I ran this situation by a legal ethics professor at a top California law school and an attorney who represents lawyers who get in trouble with their state bar. Both agreed that the young attorney is personally innocent but has a duty to Logan and the other victims of the firm’s fraud and needs to find a new job after she clears up the overbilling.
They offered these choices:
- Tell the senior partner what she learned — but don’t identify the source of the information — and insist that he correct the billings. She should get proof that corrected statements are actually sent out.
- Speak with Logan immediately and explain that she had nothing to do with the improper billing. She should be upfront — hide nothing.
- Report the fraud to her state bar, but only as a last resort. All state bar associations have a "snitch" reporting requirement when an attorney is aware of misconduct of other lawyers that "raises a substantial question as to the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects." Both lawyers I consulted agreed that there is a power imbalance in this case and that the firm could harm Linda’s career, so a report to the state bar would be appropriate only if the firm did not remedy the situation by correcting the improper billing.
Linda and Logan have a conference call
Linda agreed to a conference call with Logan that proved to be touching. While the situation was not her fault, she apologized and said, “I can’t be a party to this kind of dishonesty.”
Logan’s reaction? Talk about empathy. He could have written a book on the subject. “Young lady,” he told her, “when you get relocated, call me. I will have work for you. I am so glad we met.”
The takeaway from this story
Overbilling is a constant risk clients face. Do your homework. Research any lawyer you are considering retaining. Look for reviews. Find their name on their state bar list of attorneys and see if there is a record of discipline. Keep careful records of the time you spend on the phone or in meetings with a lawyer.
Finally, if the bill doesn’t make sense, discuss it with your lawyer at no cost! (See my previous article on this topic, Yes, Some Unethical Attorneys Pad Their Bills. Here’s One Clear Case.)
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Six Ways to Optimize Your Charitable Giving Before Year-EndAs 2024 winds down, right now is the time to look at how you plan to handle your charitable giving. The sooner you start, the more tax-efficient you can be.
-
How Preferred Stocks Can Boost Your Retirement PortfolioHigher yields, priority on dividend payments and the potential for capital appreciation are just three reasons to consider investing in preferred stocks.
-
Structured Settlement Annuity vs Lump-Sum Payout: Which Is Better?As the use of structured settlement annuities grows, it can be tough to decide whether to take the lump sum to invest or opt instead for guaranteed payments.
-
What to Do as Soon as Your Divorce Is FinalDon't delay — getting these tasks accomplished as soon as possible can help you avoid costly consequences.
-
Many Older Adults Lack Financial Security: What Can We Do?Poor financial literacy and a lack of foresight have led to this troubling reality. It's going to take tax policy changes, education and more to address it.
-
Winning Investment Strategy: Be the Tortoise AND the HareConsider treating investing like it's both a marathon and a sprint by taking advantage of the powers of time (the tortoise) and compounding (the hare).
-
How to Fight Inflation's Hidden Threat to Your SavingsIf higher prices are putting your savings goals on hold, you're in danger of financial erosion. Fortunately, several strategies can help stop the spread.
-
10 Inefficiencies I Look for on Rich Retirees' Tax ReturnsYour tax return could hold clues to several missed opportunities and important gaps in your retirement planning.
