by RANDALL DIFUNTORUM
The State Bar's Standing Committee on Professional Responsibility and Conduct (COPRAC) has issued a new advisory opinion on the topic of billing practices. State Bar Formal Opinion No. 1996-147 surveys the ethical considerations involved when an attorney bills clients for work performed on two or more matters at the same time.
COPRAC opines that an attorney may not bill a full hourly rate to more than one client for the same time period, or bill one client a multiple of that hourly fee for the same time period, unless the attorney has (1) disclosed the billing practice at the outset of the relationship; (2) obtained client consent; and (3) made sure that the fee charged to each client is not "unconscionable" under rule 4-200 ("fees for legal services") of the California Rules of Professional Conduct.
COPRAC bases this conclusion on its analysis of Business & Professions Code §6148 (regarding written fee agreements), rule 4-200 and the requirements mandated by an attorney's fiduciary duties.
COPRAC's opinion presents three hypothetical scenarios set against a general fact pattern wherein an attorney represents an asbestos company which is named in four asbestosis cases filed by four separate plaintiffs. The attorney's fee agreement with the company provides for hourly billing.
In the first hypothetical, the attorney attends status conferences in each of the four cases on the same day and spends a total of four hours in court. The issue posed is whether the attorney may bill four hours to each file.
In the second hypothetical, the attorney is retained by three additional companies, each on an hourly rate, to defend against a personal injury claim. The attorney attends a status conference on that matter on behalf of all the clients. The attorney was in court for two hours. The issue posed is whether the attorney may bill two hours to each of the clients.
In the third hypothetical, the attorney takes a six-hour airline flight to attend the deposition of one client's CEO. During the flight, the attorney works for five hours on a case relating to another client. The attorney's fee agreement provides that an hourly rate will be charged for travel time. The issue posed is whether the attorney may bill six hours to one client for the travel time and five hours to the other client for the work on the file.
COPRAC finds that each of the three scenarios may involve the charging of an improper fee if careful steps are not followed. COPRAC focuses on two primary concerns: client consent and whether a fee is unconscionable.
In discussing client consent, COPRAC cites authority for the proposition that the attorney-client relationship is of the highest fiduciary character and that attorneys have a professional responsibility to make sure clients understand their billing procedures. COPRAC asserts that an attorney who works on two matters simultaneously is not required to divide that time equally among the involved clients. However, COPRAC takes the position that when an attorney bills the same time on more than one matter or for more than one client, the lawyer must fully disclose this practice to the clients and obtain the clients' consent to the fee arrangement.
Assuming that a client consents, COPRAC next addresses the issue of unconscionability of such fee arrangements. Citing rule 4-200, the prohibition against charging or collecting an unconscionable fee, and case law, COPRAC finds that a fee is unconscionable if it is an exorbitant fee that is wholly disproportionate to the services performed or if it is a fee paid for work which was not done or which is either redundant, excessive or unnecessary.
Applying these concepts, and the factors listed in rule 4-200(B) for determining the conscionability of a fee, to the kinds of billing practices suggested by the hypothetical facts, COPRAC opines that where a lawyer has informed a client of the fee and obtained the client's consent, and the fee otherwise meets the requirements of rule 4-200, then the disclosed billing practice does not rise to the level of unconscionability.
COPRAC concludes that specific scenarios must be scrutinized to determine whether work has actually been performed and whether the time proposed to be billed to each file will not exceed that which would have been expended but for the fortuity of scheduling or the representation of multiple clients.
Finally, it is important to note that COPRAC's opinion does not address "value billing" or "task-based billing" arrangements, such as those used in drafting documents. COPRAC expressly exempts these arrangements from the limited scope of its opinion, but cautions that where a fee arrangement contemplates an hourly billing arrangement, the attorney may not arbitrarily "value bill."
The ethics opinions of the State Bar Standing Committee on Professional Responsibility and Conduct are advisory only. To obtain full-text copies of any formal opinion, call 415/241-2157.
Randall Difuntorum is a staff attorney in the State Bar's Office of Professional Competence, Planning & Development.