Topic: Professions & Institutions

The Ethics of Double-Billing
(7/12/2007)

It's a standard legal ethics seminar question. You're a lawyer flying cross-country to do work for a client who is paying for your time and your flight. On the way, you do an hour's worth of work on another client's file. Can you ethically charge that client for the hour, even though it's already being paid for by someone else?

As far as legal ethics goes, the answer is well-established. No. This would be double-billing, charging two clients for the same hour of work. The practice violates at least two of the American Bar Association's Model Rules of Professional Conduct: 1.5, which prohibits a lawyer from charging an unreasonable fee (charging two hours when you only work one is inherently unreasonable, don't you think?), and 8.4, which prohibits dishonesty (claiming you have worked two hours when you really only worked one is obviously dishonest.) Yet a recent anonymous survey of 251 lawyers nationwide revealed that 46.6 percent of the lawyers surveyed saw nothing unethical about billing two clients for the same hour. Of those lawyers who approved the practice, nearly half said that the client didn't need to know that the lawyer was double-dipping.

Let's eliminate any suspense here by declaring that the practice is dead wrong, unethical to the core, and that any lawyer who either engages in the practice or defends it shouldn't be trusted with the milk money. William G. Ross, who teaches law at Samford University's Cumberland School of Law in Birmingham, Alabama., conducted the billing survey, and appears to be as ethically challenged as the lawyers he polled. Interviewed by the Tampa Tribune, he gave this lame rationalization: "My position on this has been that as long as the attorney is performing a useful service for both clients, the attorney does have the right to bill both clients. Both clients are benefiting from the time. Just because it creates a windfall for the attorney does not mean it's unethical."

No, but billing both clients by the hour IS unethical. That's what retainers are for: the client pays an agreed upon fee for the work. Billing on an hourly basis implies that a given hour was devoted to a client's work and only to that client's work. Ross' "argument" is full of contradictions. The attorney is not performing a "useful service" for both clients during the hour billed if 100% of the work is for only one of them. And the definition of "windfall" includes receiving money without really earning it. A lawyer getting a financial "windfall" from billing a client for work he or she didn't do is per se unethical. So now we know why Prof. Ross isn't practicing law. The remaining mystery is why he's allowed to teach it, if this is typical of his ethical judgement.

At least Ross agrees that it is unethical to double-bill an hour without getting permission from the clients first, since the ethics rules require attorneys to be direct and clear about what goes into their billing decisions. And asking if you can double-bill a client is usually going to be received as well as if you ask if you can set his hair on fire. So a lawyer who is going to charge two clients for one hour will almost always do it secretly, making it unethical even by Prof. Ross' generous standards.

34.7% of his respondents also said that they had double-billed in the past, and there is reason to believe that this figure is understated. A few years ago, for example, "The Washingtonian" magazine asked D.C. associates about bill-padding, and almost three-fourths said that they were guilty of it. How does it happen that so many lawyers engage in conduct that the profession has so unequivocally declared is unethical?

There are severe pressures on young lawyers in many large law firms to bill at least a set minimum number of hours, and even though these firms officially disapprove double-billing and bill-padding, they know that these practices will inevitably be the result of tightening the screws on competing associates. There is also a tendency among some lawyers to take the lack of scrutiny some large companies devote to law firm billing as tacit consent to bill-padding. There are many lawyers, almost 50% by Prof. Ross's count, that are willing to join him in torturing logic and ethics to reach the conclusion that despite ABA Formal Opinion 93-379, which explains what is wrong with double-billing carefully and persuasively, it is perfectly reasonable and fair for a lawyer to toil one hour but charge for two, and to perform work for one client yet charge another as well.

And there is the sad but unavoidable fact that double-billing is almost impossible to discover. For the most unethical of our lawyers, this alone is enough to give them the green light to do it. Nevertheless, there is no legitimate controversy over the ethics of double-billing. The practice is unfair, dishonest, and wrong.

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