Hourly Billing leads to Suspension; How Much is Too Much?: Know the Battles to Fight

Billing is one of the toughest things lawyers do.

The legal field is struggling with the proper method of billing for legal services.  There are a number of ways, mostly broken down into the following styles: Contingency, Hourly, Value Pricing and some hybrids such as menu billing or flat fee billing.

Each method has its critics, and the Indiana State Bar Association recently held a session at its Annual Meeting on “The Future of Legal Fees.”  MS lawyer and ABA bestselling author Mark Chinn was the presenter.  One fear expressed there was that Value Pricing fees could run afoul of ethics issues.

Any system of billing can run afoul of ethical issues. The primary breach is in the lawyer, not the system. “But lead me not into temptation…” Michael Murphy, a Massachusetts lawyer, learned the hard way.  He was a salary lawyer for an unnamed law firm.  On at least two cases he “knowingly spent more time than necessary” in order to increase his billables. He reviewed materials multiple times, often for hearings that had not been scheduled yet. He billed for time performing tasks that “should have been delegated” to lower cost lawyers at smaller billing rates. He billed for performing tasks that others had performed. Author John Conlon regularly writes about the problem for clients about misallocation of duties between higher priced lawyers and the lower priced associates or non-lawyer staff.

Murphy’s firm refunded the fees, and wrote off unpaid bills, but Murphy got a Year and A Day suspension.  Rumor has it that this kind of billing problem occurs with enough frequency that it should be discussed in biglaw and small firm settings, and forbidden by policy. The Mass. Court found the fees charged was a violation of Rules 1.5(a) and 8.4(c).

H/T Andy Perkins

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106 Paragraphs in the Ethics Complaint => Suspension

Illness does not give you a “Free Pass” card.  Kjell Engebretsen, a Boone County, IN lawyer appears to have struggled for years in representing his clients.  The battles may have had to do with depression or other illnesses, but were manifested in his refusal to do the clients’ legal work, or to cooperate with the Disciplinary Commission.

The charges included: neglecting clients’ cases, failing to do the work for which he was hired, failing to communicate with clients, failing to inform clients that medical problems would severely limit his ability to represent them, failing to inform clients of court orders and hearings, failing to appear at hearings and a pretrial conference, unilaterally terminating his representation of clients without protecting the clients’ interests, failing to refund unearned fees, and failing to cooperate with the Commission.

This is the fifth action against the respondent filed by the DC, and there may have been others not filed before the 2008 matter. At the time of this Order he was on two other suspensions (failure to pay costs, and non-cooperation with a show cause order), and did not respond to the charges filed here.

The Court found violations of the following Rules of Professional Conduct:

1.3: Failure to act with reasonable diligence and promptness.

1.4(a)(3): Failure to keep a client reasonably informed about the status of a matter.

1.4(a)(4): Failure to comply promptly with a client’s reasonable requests for information.

1.4(b): Failure to explain a matter to the extent reasonably necessary to permit a client to make informed decisions.

1.16(d): Failure to protect a client’s interests upon termination of representation.

1.16(d): Failure to refund an unearned fee upon termination of representation.

3.2: Failure to expedite litigation consistent with the interests of a client.

8.1(b): Failure to respond in a timely manner to the Commission’s demands for information.

8.4(c): Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.

For all that, the result may surprise you.  Read the opinion, and J. David’s dissent.
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Pick your Battles Carefully, Especially When You get the Lede

Vikrant Pawar, a NYC lawyer had to file the suit. His honor apparently was tested by the allegation.  Then the slap-down hits.  As reported in the New York Law Journal [full story behind a paywall]:

“The charge of stealing a $6.95 order of chicken wings, hardly constitutes that of a serious crime,” Manhattan Supreme Court Justice Louis York wrote, holding that Vikrant Pawar had not made a sufficient case that the charge amounted to slander.

So an event that merited the attention of Pawar’s family and staff, and the owner of the Wings Shop, has now been made a record in the courts, and in the popular legal media.  Now we know he was accused of stealing chicken wings, and that the court does not find that charge to be an insult to his integrity.

Maybe the better resolution was to pay the tab, tip the waiter and stay quiet.  H/T Patrick Olmstead.

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If you see a story worth mentioning in the blog, please share at ted@peterson-waggoner.com

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One thought on “Hourly Billing leads to Suspension; How Much is Too Much?: Know the Battles to Fight

  1. According to the author of this blog: “[M]aybe the better resolution was to pay the tab, tip the waiter and stay quiet.” The lawsuit states that the attorney did pay the $6.95. I believe the attorney over some dumpy bar on the Upper East Side of Manhattan, which, more likely than not, lied to the police to cover up their serving underage patrons. Thus, it was irresponsible for the author of this blog to draw this conclusion.

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