The Gray Area of a Lawyer’s “Billable Hour”

by Admin on March 26, 2013

A New York lawsuit is adding evidence to a commonly held belief about the invoices delivered by lawyers, namely, that they’ll unnecessarily inflated.

The world’s largest law firm, DLA Piper, is being counter-sued by an energy industry executive who claims his unpaid legal bills, are the result of wrongful and excessive charges by his lawyers at the firm.

DLA Piper had sued the defendant, Adam H. Victor, for over $$675,000 in unpaid bills. Victor’s counterclaim accused the law firm of a “sweeping practice of over-billing.”

And he might be right, based on a thread of emails exchanged between lawyers at the firm.

“Churn that bill, baby!” was how one lawyer described an assignment Victor retained the law firm for. Another lawyer writes, “I hear we are already 200k over our estimate — that’s Team DLA Piper!”

While Victor’s case is unusual (legal ethics scholars say it’s  “highly unusual to find documentary evidence of possible churning –  the creation of unnecessary work to drive up a client’s bill”), it certainly sheds light on a topic many suspect.

The New York Times quotes a study by Samford University’s Cumberland School of Law, where 250 lawyers were surveyed and “more than half acknowledged that the prospect of billing extra time influenced their decision to perform pointless assignments, such as doing excessive legal research or extraneous document review.”

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For Victor, the bill for his one-on-one point of contact at the once modestly sized firm ended up being multiple layers he didn’t recognize. Junior lawyers were tasked with assignments, resulting in “higher bills and subpar work.” Victor’s lawyer has now amended the lawsuit to include a fraud claim and a request for $22.5 million in punitive damages.

His story, however, is one that many fear when hiring lawyers for small cases or retaining them — the truth in the billable hour. While some firms are moving away from the billable hour, many legal tasks require it. In addition, different needs require different billing structures. In criminal defense cases, it’s important to thoroughly research a criminal defense lawyer and ask for references before hiring one.

 

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