By Thomas P. McGarry and Thomas P. Sukowicz
Hinshaw & Culbertson LLP
Certain billing practices have been the basis for disciplinary sanctions against attorneys.
For example, in In re Adams , 05 CH 30 (Hearing Board Report, 2006), the attorney was disciplined for billing in three different cases the full amount of the same time he spent in court on the three cases, billing for depositions and hearings that were not attended and billing for travel expenses that were not incurred.
In another case, the attorney was found to have engaged in fraud against a client and the client's insurer when he submitted bills for services that were never performed, for services that were never authorized and for expenses that were never incurred. In re Walsh, 94 CH 653, M.R. 16705 (2000).
In In re Haskell, 136 Wash.2d 300, 962 P.2d 813 (Wash., 1998), an insurance defense lawyer sent billing statements to the insurer indicating that he had performed legal work that had actually been performed by associates who billed out at lower rates.
The result was that the insurer was billed at the attorney's higher rate for the work done, increasing the total fee.
Although the attorney stated that his motive was not financial gain, but only to retain the insurer's business, the court found that he engaged in dishonesty, fraud, deceit or misrepresentation.
In In re Kroll, 212 A.D.2d 220, 630 N.Y.S. 2d 512 (N.Y.A.D. 1 Dept., 1995), an attorney submitted false expense reimbursement claims, even though he claimed that he had underbilled or cut bills as to certain hours and expenses, so that the overbillings and overcharges just evened things out. His conduct was held to have been dishonest and tantamount to conversion.
Dishonesty has been found for false billing even when it does not affect the ultimate fee paid by the client.
In In re Romansky, 825 A.2d 311 (D.C.Court of Appeals, 2003), a lawyer instructed an associate to bill her time representing Romansky's father to another case.
The client in the case to which the time was billed agreed to pay a flat fee, so the amount of time billed to that case did not affect the amount of the bill to that client. The court found that, although there was no financial impact on either the firm or the client, the attorney's conduct demonstrated a lack of integrity and honesty.
Similarly, in In re Lawrence , 884 So.2d 561 (La., 2004), a lawyer who was concerned that he might lose his job because he had too little work to do padded his time sheets by recording hours spent on client matters that he did not actually work.
The lawyer justified the padding of his time sheets because the cases in which he recorded the false time were contingency fee cases, so the ultimate fee was not affected by the false billing.
The court, however, held that the lawyer's conduct was dishonest, fraudulent and deceitful and that any lack of harm was not a factor in determining guilt, but only in determining the sanction.
In In re Moeller , 582 N.W.2d 554 (Minn., 1998), an attorney instructed his staff to create billing statements based on a target fee and sent bills containing errors regarding the date on which work was performed, the attorney who did the work and work that could not be substantiated by file documents or records.
The court rejected the attorney's argument that there was no net increase to the client in the amount of fees charged as a result of the inaccuracies, finding that the effect on the calculation of the client's bill or the reasonableness of the amount of the fee was irrelevant, as the information was false.
Inaccurate billing statements do not always involve dishonesty and fraud.
For example, in In re Price, 95 CH 503, M.R. 12816 (1996), the ARDC Hearing Board found that a lawyer was negligent and reckless (but not dishonest) when he submitted a reimbursement request for a deposition transcript deposit in an amount greater than the actual deposit.
He supported his request by a questionable receipt without backup documentation and fabricated a letter from the court reporting service regarding the purported payment for which he was requesting reimbursement. He was disciplined even without a finding of dishonesty.
Also, in the Romansky case, the lawyer claimed that he did not know he could not "premium bill" and argued that his conduct was only negligent, not dishonest.
The court questioned whether a finding of dishonesty could be based solely on the mere act of adjusting client bills without authorization and remanded the case for findings as to the attorney's state of mind and whether he acted knowingly or recklessly when he adjusted the bills.
As these cases suggest, lawyers cannot be too scrupulous in their billing activities if they want to avoid disciplinary action.