Spring 2006
LEGAL COST CONTAINMENT
THE 95-HOUR DAY — OR THE NEED FOR BILLING SCRUTINY
In a recent legal audit involving a law firm’s billing in construction defect litigation, I began to notice a partner with a “heavy pen” — a term we use in legal audit to identify those who seem to bill larger amounts of time than necessary for routine tasks. In this case, it wasn’t obvious at first, as the firm didn’t “block-bill,” and the amounts billed per entry were typically less than an hour. As with many types of litigation, however, construction defect frequently encompasses review of a myriad of documents sent by subcontractors, experts, etc. There are often cross-actions and lots of activities, including destructive testing, depositions, and law and motion tasks. Many of these result in notices or other minor documents which fill up legal files. They are frequently not substantive and only require a cursory review by a competent paralegal or associate to identify if a response is required.
In this case, the partner had taken it upon himself to review all incoming documentation, attend all hearings, depositions, and conferences, or so it seemed. After review of numerous pages per day of typical entries, I started adding up the hours billed per day and was amazed. The attorney’s daily billing often added up to 20, 22, and, in one amazing instance 95.2 hours! There were four dates over the course of the bills (two years) where he billed in excess of 24 hours in a single day.
What is the explanation? Good question. We are still waiting to find out how he accounts for this billing “irregularity.” It is likely that there were, in fact, multiple people who reviewed materials and used the same billing ID (the managing partner) to account for their work. There are other possible explanations, but none of them would make this practice acceptable.
In legal audit work, we stress the need for individual billing entries rather than “block-billing.” There are many reasons why block-billing is not appropriate. However, when billing is set forth in individual entries, it is critical that there is oversight. Few lawyers will bill improperly, and most billing programs have automatic safeguards which will not allow a timekeeper to bill more than 24 hours a day. Obviously this is a gross breach of a lawyer’s ethical obligations to his/her client.
Billing scrutiny is important. Lawyers, like anyone else, can make mistakes on their bills. Most are minor; however, we often see errors in mathematical calculations, inadvertent “double-billed” entries, or other miscalculations that cost clients money.
Whether you utilize outside help in scrutinizing bills or perform the duty yourself, anyone who is responsible for approving payment of legal billing should shudder at the 95-hour day. This entry and the others on the bills reviewed in the course of my review passed through the law firm and the client and may never have been caught without an auditor’s suspicious mind.
KAY HOLMEN
Ms. Holmen is a senior auditor at KPC Legal Audit Services Inc. Email: kch@kpclegal.com.
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