Overbilling for Legal Work Not All that Uncommon
Mary Jaclyn Cook, a former associate and member of the products liability group at Faegre Baker Daniel in Denver, was quite short of her target when it came to billable legal hours in December 2016. That is, until the attorney finalized 60 entries on January 3rd, two weeks after returning home from her wedding and honeymoon. The billable hours’ target was 1,850. So, Cook took it upon herself to inflate the time she had “working”, charging almost $40,000 in time that she not actually at the office. These entries included both inflated entries as well as those entirely fabricated.
The books were caught by a supervisor due to the excessively high number reported. Cook actually admitted wrongdoing and said she inflated the time because she thought she would be terminated if she didn’t meet the expected hours. The legal firm gave Cook the opportunity to resign, rather than firing her, which she accepted. With the exception of one client, all hours were then corrected before bills were sent to clients.
The law firm submitted the following statement, emphasizing that despite what Cook may have believed, failure to meet hours is not grounds for termination. “We communicate regularly with associates on the standards and competencies by which they are evaluated, and offer many resources to help our lawyers build successful careers.”
The Presiding Disciplinary Judge approved Cook’s conditional admission of misconduct and suspended her from practicing for nine months, effective August 10, 2017.
A billable hour requirement “doesn’t encourage efficiency, and it doesn’t encourage the most cost conscious use of attorneys’ services for clients,” said Michael Frisch of Georgetown University. “Lawyers sometimes conflate their own financial interests with the interests of the client who pays the bills,” Professor William G. Ross of Samford University’s Cumberland School of law said. “Of course, most lawyers are ethical, but the billable hour creates perverse incentives.”
The issue of overbilling is not all that uncommon. In fact, Ross conducted a survey of 250 attorneys back in 2007 and more than half acknowledged that billing extra time caused them to feel forced to perform pointless duties, such as excessive research and document review. He said “featherbedding,” or throwing way too much manpower at every problem, is also a major problem.
Case in point, a client retained the world’s largest law firm DLA Piper, in 2010 to prepare a bankruptcy filing for one of his companies. Internal correspondence between three attorneys at the firm showed little regard for the client’s pocket book.
One such email proclaimed, “Now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode,” attorney Christopher Thomson wrote. “That bill shall know no limits.”
Noting the excessively high fees and already in a financial pinch, the client didn’t immediately pay his bills. So, DLA Piper sued him seeking $675,000 in unpaid legal bills. The man then filed a counterclaim, accusing the law firm of a “sweeping practice of overbilling.” Luckily, there was documented proof, which is rare. The emails served as solid evidence of the firm’s intention to overbill.