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

****

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.
****

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.

***

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

Advertisement

Do Not Bribe a Judge, Ignore the Disciplinary Commission, or Create a Conflict with your Clients

Even Attempting to Bribe a Judge is not Good Conduct

An attempt to bribe a judge is not a good thing for a lawyer to try to do, hiding it and then getting caught makes for the basis for a Slap-down by the subsequent judge.

When the investigating judge uses 123 pages to describe, in part, the evidence of the bribe attempt by the Eaton Corp.’s company lawyer Mark McGuire, it is the beginning of a bad time.  You can read the article here and see the links it has to the ruling.  Bad days start with these kinds of rulings. It will likely get much worse in the coming days for McGuire.

*****

Cooperate and Respond when you get the Certified Letter

Among the most important days in a lawyer’s life is the receipt of a certified letter from the Indiana Supreme Court Disciplinary Commission’s Executive Director.  Not a pleasant day, but an important one.  This letter means that someone has filed a complaint that you broke the Rules of Professional Conduct and your license is now at risk.  It happened to James Nafe, twice, and he got in trouble for not responding either time. In March 2012, and again in April he was Suspended from the Practice of Law for Noncooperation.

Lawyers must take the disciplinary process seriously, and if they don’t the Disciplinary Commission will ask the Supreme Court to suspend their license to practice. There are few other actions that can be taken at that time.  Nafe got suspended for a complaint that has not yet been made public, so we would not know that there are complaints against him (yet) if he had contacted the Commission. At that time he is to respond with his version of the events, or better yet, hired an experienced lawyer to walk with him through the process.

The suspensions finally got his attention, since on May 15, 2012 the Supreme Court terminated the Noncooperation Suspension by a published Order here for the first case, and here for the second case. Don’t get yourself in a box like this. Even lawyers need lawyers sometimes.

****

Who is the Client?

When two people come to see you about a problem the first question must be, can I represent both people as clients? Lawyers like to help people — we want to solve our clients’ problems, but inadequate analysis of the potential clients’ needs can cause real trouble.  Todd Wallsmith tried to help two brothers whose father had disinherited them. After a while the brothers disagreed on case tactics, then case substance, and rather than obtain separate counsel for one of the brothers, he tried to handle both their claims, which diverged even more. The lawyer finally agreed with the other side on an issue, with one of the client’s consents, but without the other’s. As their agent, he had the power to consent, but not the authority for the one. The case blew up between the lawyer and the one client.

The lawyer and Commission agreed to a disposition of the complaint which was submitted to the Supreme Court. It found that there were four Rule violations, and as a penalty it suspended the lawyer’s license to practice law for 180 days, then withheld the full suspension in favor of 45 days suspension and 24 months of probation. A good result due to the circumstances. Also a good lesson for lawyers across the country.

Avoiding conflicts in the interests of each of your clients — when there are multiple clients — is not easy. Clients do not like to be told that you cannot take care of all of them, but sometimes you can’t. In some cases in some states multiple client representation is forbidden, in other cases it is merely a minefield.