Paul L. Caron

Tuesday, May 1, 2007

WSJ: 55% of Lawyers Pad Bills; 35% Double Bill

Interesting post on the WSJ Law Blog:  Study Suggests Significant Billing Abuse:

There’s a whole lot of bill padding going on ─ according to a just-completed billing survey (link unavailable) by William G. Ross, a professor at Samford University’s Cumberland School of Law who specializes in billing ethics. Ross polled 5,000 attorneys from various walks of life throughout the country, and 251 responded. He worked with Reed Business Information to generate a random sampling of lawyers who work at law firms. Two-thirds said they had “specific knowledge” of bill padding ─ a finding virtually identical to one reached by Ross in a 1995 billing survey. Also, 54.6% of the respondents (as compared with 40.3% in 1995) admitted that they had sometimes performed unnecessary tasks just to bump up their billable output. Ross says that bill padding involves invoicing a client for work never performed — or exaggerating the amount of time spent on a matter—- while unnecessary work is that which “exceeds any marginal utility” to a client. ...

And then there is the matter of “double billing,” an oft-debated topic. Here’s the issue: A New York lawyer travels to Pittsburgh to attend a hearing for Client A, billing the client for her travel time. But on the plane she also bills Client B for reviewing a brief in B’s case. Courts, academics, and the American Bar Association, Ross says, almost uniformly frown on doubling billing. But the percentage of attorneys who admitted that they had double billed rose from 23% in 1996 to 34.7% in 2007. And only 51.8% regarded the practice as unethical in 2007, as compared with 64.7% in 1995.

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Posted by: Terence Jesse | Sep 24, 2007 2:46:52 PM

I really am staggered by this. Astonished. I just don't know what to make of it.

I spent 20 years in large firm general managamement consulting, and another two or three consulting two Big 4 acocunting firms (those are not double-counted years).

In all those years, in two professions who also largely bill fro time spent, I cannot recall one single instance of someone padding bills. I'm sure there must have been some, but I honestly cannot recall one. Not one.

Under-billing, yes. Under-charging, yes. It was practically endemic in the accounting world, where firms didn't have the courage to charge their actual stated rates, much less put their thumb on the scale!

What am I to conclude?

a. I have spent my life blissfully ignorant, in some ivory tower;
b. Things have really changed since I left big-firm consulting in 1995;
c. There's something about lawyers.

I have always been astonished at the mega-hours I have seen some lawyers accumulate; now I have some sense of why.

Also, the rate of increase is enormous. From 40.3% in 1995 to 54.5% now? That's a 34% increase in lying and cheating (hey let's call it what it is) in just ten years. (Not that a 40.3% theft rate was all that much to brag about in the first place).

Even allowing for some naivete on my part--I just don't think other professions come anywhere near this level of putting their thumbs on the scale.

Others? True, not true? And if true, what possible excuse can there be for taking money from one's clients under false pretenses?

Posted by: Charles H. Green | May 2, 2007 11:39:20 AM

Interesting. One wishes some enterprising legal scholar would turn to the enormous, but unharvested, database of law firm billing records that are publicly available through corporate Chapter 11 bankruptcy cases. Every bankruptcy court in the country has had an electronic filing system for several years now. Every law firm that seeks to get paid in a Chapter 11 case must submit detailed billing records. Those billing records can be viewed and downloaded via the PACER system at the bargain price of $0.08/page, set by the Judicial Conference of the United States. Analyzing this billing data might be more productive than gathering anecdotal evidence via interviews of lawyers.

Posted by: Jake | May 1, 2007 8:33:41 PM