The Need for Honest Record Keeping of Bills
A few reasons why some lawyers might inflate their bills, and tips on how to avoid doing it.
A colleague of mine has run a lucrative business for the past twenty years evaluating lawyers bills—generally on behalf of either dissatisfied clients or distrustful opponents of inflated attorneys fees claims. Compared to what happens in the military suppliers realm, the amount of fraud by lawyers when it comes to billing is probably on the small end of the spectrum. But it shouldn’t exist at all. Most attorneys are paid reasonably well—and closely regulated—to discourage any tendency towards misrepresentation. But unfortunately it exists. Lesson learned: the key to your long-term success is
to avoid any tendency to indulge in what is, in effect, fraudulent conduct.
There are multiple reasons why lawyers might inflate their bills, some more nefarious than others. Sometimes it is merely an innocent lack of attention to one’s schedule and actions, especially if the billing doesn’t get done the day of the activity or soon thereafter. We all make mistakes, and a genuine miscalculation is understandable, especially for overworked lawyers. And if it happens, your client should feel free to point it out and have it readily corrected. But it’s actually quite easy to avoid such errors. Keep track of your time on a daily basis, take an honest look at your total day’s billings, subtract out the non-billable time spent at lunch or on the phone with your family, and you should be able to detect an inflated entry.
The second cause is an understandable—but unacceptable—sense of entitlement, when your sense of the value of the work is dramatically in excess of the time spent on the task. Even if you are able to write a thorough brief in an hour because of your twenty years of experience in the field, don’t pad your timesheets; instead, raise your hourly rate to reflect that skill level. If a quick conversation or email results in a desired outcome, celebrate your efficiency and your client will appreciate it—and you will be repaid in referrals and further business with your client. And if your client has elected to pay you based upon the value of the activity, then you don’t have to limit your fees to your actual time spent on the matter—but don’t retroactively convert an hourly rate to a value-based billing in a dishonest manner.
The third motivation is outright greed, and that’s just wrong—and it probably lead to monetary rewards for you in the long run. Clients eventually figure out when they are being ripped off by their own attorney, and they don’t like it. Chances are the State Bar or a fee arbitrator won’t like it either.
Lastly, there is the desire to please others (not clients, obviously) such as senior partners, co-workers, spouses, or simply to inflate your own self-image as a busy lawyer. We’ve all faced this problem at various times in our careers. One can experience a troubling decline in billable work at any point in one’s career. Clients decide to switch to another lawyer or they postpone the project altogether. Cases settle unexpectedly, or our marketing efforts just aren’t working out. Depending on your overall financial situation, this can either be a minor self-image problem or it can become a true financial catastrophe. If it lasts for more than a few weeks and your end of the month summary of your time is about to be compiled, it can be tempting to wish that your total hours were greater than they are. But wishing it so doesn’t make it so—and giving in to this temptation will only bring about bad consequences. It won’t make your real financial situation get better, and it will likely lead to a bad reputation or worse, a claim or State Bar complaint by a client. Take stock of the disturbing reality, but don’t try to cover it up with inflated timesheets.
Conversely, don’t understate your hours either. If something has taken you a lot longer than anticipated, keep your eye on the problem, but don’t hide it by cutting your hours from your record-keeping. It’s totally fine to write off some time, and in some instances it’s a prudent business practice. But be aware of the true time something has taken – and in general it’s best that your client is aware of it as well. In extreme cases, where you think your client doesn’t need to know the details of what took you so long, you can simple not bill the time at all. Most billing programs allow you to keep track of the time but exclude it from the bill, which allows you to monitor what has happened, wholly apart from what you show to your client.
One last pointer. Many of us have overlapping relationships with clients, where we do billable work but also socialize with them, or consult informally on non-billable matters. Whenever possible I try to be direct with my clients about what I’m billing for, letting them know then I’ve “turned off” or “turned on” the clock. If I forget to mention this during the meeting or call, I try to remember to send them a quick email after the event, letting them know how I’ve allocated our time together.
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.