Lawyers Caught Overbilling? The Billable Hour Shares the Blame

  • Canada
  • 01/21/2019
  • The American Lawyer

The kind of intentional overbilling a former Kirkland & Ellis lawyer recently admitted is rare, experts say. But when it does occur, it can be seen as another consequence of law firms’ questionable attachment to the billable hour.

Christopher Anderson, the former lawyer at Kirkland & Ellis and Chicago firm Neal Gerber & Eisenberg who admitted to years of overbilling clients, blamed his actions on his firms’ billing targets—or at least how he perceived them.

Anderson said that he would often boost his tally of reported work on days that he felt he came up short, billing a client for half an hour when he had only put in 18 minutes, for example.

Given the intense pressure at law firms to meet billable hours expectations, Anderson’s conduct, while inarguably improper, shouldn’t necessarily be shocking. According to legal consultancy Altman Weil’s most recent Law Firms in Transition survey, 48.8 percent of firms failed to meet their annual targets for billable hours in 2017. With nearly half of the market falling short, the pressure to bill more is undoubtedly real.

But experts on billing and legal ethics say that intentional acts of overbilling like Anderson’s are still uncommon.

“I see a lot of overbilling going on, but a lot of times it’s inadvertent,” said John Conlon, a legal ethics expert who formerly chaired the Indiana State Bar Legal Ethics Committee. He pointed to the act of filing a document—a task courts have said is a clerical task that can’t be billed.

Adam Smith Esq. partner Janet Stanton, a legal industry consultant, reached the same conclusion: “I think it’s pretty rare that people consciously overbill.”

“I choose to believe in any industry, that includes Law Land, that 99 percent of people are trying to do the right thing,” she added.

Perhaps some credit also should go to the legal education system. NYU School of Law Professor Stephen Gillers gathers a number of these cases for his widely used casebook Regulation of Lawyers: Problems of Law and Ethics. He was blunt about the issue in an email: “Intentional overbilling a client is a form of theft.” Gillers also used the word “rare” when describing the conduct, adding the caveat that “some of it surely goes undetected.”

Fear of the consequences may also ward off the behavior. Anderson has yet to be punished by the Illinois Attorney Regulation and Discipline Commission. But Gillers noted that sanctions can be severe: from lengthy suspension to disbarment.

The immediate benefit from such conduct is also marginal, particularly when a lawyer might be bringing in a sizeable income even before overt manipulations. Neal Gerber has offered to refund clients $150,000 from the three-plus years he was an associate at the firm, representing 20 percent of his total billings.

But firms’ expectations are also part of the equation, considering that inflated hours won’t just yield immediate benefits such as bonus eligibility, but also advancement towards partnership and its far more lucrative awards. Indeed, Anderson successfully grabbed the brass ring of partnership before coming clean about his conduct soon afterwards.

“This is a perennial problem over the last generation with American law firms: the intensification of competition not only with other firms but also with lawyers within a particular firm,” Gellers said. “And it’s only escalated. No one has been able to say, ‘Wait a minute, let’s get some sense of proportion here and recognize that there are values in life other than money.’”

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