By David Majchrzak
California lawyers have a seemingly simple charge when it comes to billing. Rule of Professional Conduct 4-200 precludes them from agreeing to, charging, or collecting an illegal or unconscionable fee. Yet, the conscionability of a fee is not always easy to determine. Despite that, there are myriad reasons to examine where that line is. Examining that rationale, in turn, leads to practices that lawyers may implement to produce and maintain good records.
First, billing can be an incredibly effective tool to communicate with clients. Lawyers generally charge a fairly significant amount of money for services that are completed mostly out of the clients’ sight. And, although the lawyer may effectively communicate significant developments to a client, it would be reasonable for at least some clients to still wonder what all the fees are going to. Clear descriptions of both the activities and their purpose, something that is sometimes missing from descriptions, answer such questions and help develop trust with the client.
Second, what lawyers charge does not only impact the trust that client has for the current representation, but also may impact future prospects. The easiest way for lawyers to develop the business they bring in is through happy clients. Not only will the current clients return over the long run as they need additional assistance, but they will be more likely to refer the attorney to others seeking similar help.
With that in mind, lawyers should keep an eye on how they can most efficiently meet client goals. When reviewing bills, they may consider whether the task was one that required a lawyer to do it, whether it was necessary to protect or further the client’s interests, and whether the activity and its goal justifies the amount of time spent. If it does not, then the lawyer should consider revising the description and/or the amount of time charged–though, for marketing reasons, it may still be a good idea to let the client know that a portion of the work is not being billed for. Keep in mind that it is more valuable to have a client that returns every year with $250,000 worth of work than one who pays $300,000 once and never returns or refers anybody else.
Finally, sometimes the representation does not begin and end with the same lawyer. In such instances, even when there was a contingency fee arrangement, good billing records are the best friend of a lawyer. That is because determination of the fee amount usually turns on a quantum meruit analysis. Lawyers who do not keep good records of what activities they completed and how long each took create hurdles for themselves. It will be much more difficult for them to create accurate accountings of their time after the fact.
Regardless of how or when the records are created, disputes over how much of a fee a lawyer receives will result in a high level of scrutiny. So, the billing attorneys should be careful to follow the advice above, and review their entries for significant fees charged for a modest amount of work, overreaching on the activities that were undertaken, or doing too much remedial work, perhaps due to the number or experience of lawyers working on the matter.
Bad billing can be a gateway to discipline. Even the accusations of charging too much can lead the Office of Chief Trial Counsel into examining other aspects of the representation with a critical eye. Conversely, good billing habits are a wonderful tool to improve relationships and trust with clients. In turn, the practice becomes easier, more fun, and more profitable.
David Majchrzak is senior counsel with Klinedinst PC and a director for the SDCBA.
This article was originally published in the SDCBA’s “Ethics in Brief” column series.
No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.