What’s the bottom line on hourly billing?

By Diane Karpman

Karpman

Billing is always a problem for lawyers. It is something that we would just as soon never discuss in mixed company (that is, lawyers and clients). During this year’s MCLE season (in January, when ethics suddenly becomes popular), I played the “Billing Song.” This is a lawyer’s version of Cindy Lauper’s “Time After Time,” with words that explore how we bill clients.

One line is, “If I think of you when I am all alone, I’m billing time.” The lawyers who heard it acted shocked, as if they were 12 years old and looking at pornography.

So, let’s talk about some of the conflicts that hourly billing presents.

This is not the type of “conflict” included within Rule of Professional Conduct

3-310, and its brethren. The conflict rule is designed to address a specific lawyer’s conflict with a particular client or clients, not the general broad-based conflicts that all lawyers have in terms of billing.

A widely held misconception is that lawyers overbill. Actually, just about every lawyer I know will write off time if it is a gray area, always giving the client the benefit of doubt. This is the principal reason for keeping contemporaneous time records. It is more profitable for you. Note — there is no prohibition about subsequently recapturing the time.

We also underbill on days when we have low self-esteem and don’t believe that anything we did is valuable. Some lawyers underbill. If they are having a great time on an exciting issue, they are having too much fun to be paid for it. I know I am not the only California lawyer who suffers from these afflictions.

Travel time could be a dissertation in itself. Of course, if it is part of the fee agreement and says “door to door,” that is what it means. But let’s do some soul searching. Obviously, you cannot be traveling on one client’s dime and working on a brief for another. Sitting in the airport or a traffic jam and thinking about or working on that client’s case is billable.

Some lawyers (at the end of a day stuck on a plane and reading trash) will bill half-time. What about stopping the clock when doing e-mail or personal calls, or when you “go down the hall?”

How do you bill when your mind is wandering? Is that 63 percent of your hourly? If you have to use a messenger because of your mistake, then arguably it should not be charged to the client. If you are traveling and lose your ticket, how do you apportion the responsibility?

The bottom line (and that is what we are thinking about) is that there is nothing authoritative about the tremendous discretion involved in billing for travel. You have to

factor in your need to be gainfully employed in order to pay the mortgage, tuition or orthodontist, and your overarching fiduciary duty . . .  to be fair. 

• Diane Karpman, a legal ethics expert, can be reached at 310-887-3900 or at karpethics@aol.com.