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Overbilling by attorneys a common practice, legal auditors, ABA report

THE BALTIMORE SUN

Randy Blim winced as he pored over the legal bills in his Hollywood, Calif., office. Tens of thousands of dollars in charges had almost no documentation. When he called his company's respected New York lawyer for an explanation, the attorney brushed him off as a rube.

"This is what you get when you hire a big New York City law firm," Mr. Blim said the lawyer chided him good-naturedly.

Mr. Blim backed off but resented the lawyer's tone of superiority. He would later learn that the lawyer had, among other things, dined at client expense at the priciest of restaurants and charged the Hollywood post-production company for a female friend to accompany him on a business trip.

According to legal fee auditors, clients often hesitate to challenge their lawyers' bills because they are uncertain about how much such services should cost and, more significantly, they fear alienating a hired advocate.

But legal consultants say there are plenty of reasons for clients to worry. Many lawyers inflate their bills, whether by charging $1 a page for a facsimile that costs the firm 15 cents or by charging for a paralegal when the work was performed by a lesser-paid secretary. In some cases, the offenses are more egregious.

Even the American Bar Association acknowledges the problem.

"One major factor contributing to the discouraging public opinion of the legal profession," the association wrote in guidelines issued in December, "appears to be the billing practices of some of its members."

Thirty-eight percent of 270 lawyers responding to a 1991 survey of a cross-section of the ABA acknowledged that clients are occasionally billed for work not performed, and 17 percent admitted they had charged more than one client for the same work.

Most common, according to fee auditors, are charges for unnecessary work or for training less-experienced lawyers.

Most lawyers are conscientious, said Lawrence J. Fox, an ABA official who helped write the overbilling guidelines, but the pressure to bill hours, combined with the economic downturn, has "created an environment" that may encourage some lawyers to bill for more hours than they work.

A federal judge in April castigated the prestigious Los Angeles law firm of Gibson, Dunn & Crutcher for charging for repetitive and unnecessary work and excessive hours.

Particularly galling to the judge: Gibson's $99,000 charge for time spent preparing its bill.

The firm launched an internal investigation of the case. "We are certainly looking at what happened," said Gibson managing partner Ronald Beard. He said he knew of no past instances of overbilling. "This is the only time I'm aware of" such a problem, he said, adding that the lawyer who oversaw the case left the firm last fall.

Even one of the nation's top law enforcement officers was implicated in overbilling. Associate Attorney General Webster L. Hubbell resigned this year amid reports that his former Little Rock, Ark., firm was investigating him for inflating his legal charges.

Consultants who audit lawyer's bills said extravagant spending for travel and meals is less common than other billing abuses. They traced the excesses to the 1980s, when the legal profession, like the rest of the economy, was booming.

Law firms grew, and the new bureaucracies became more expensive to run. Some firms began charging for office overhead. Photocopying became part of the profits. Clients noticed curious charges on their bills: "HVC" -- heating, ventilation and air conditioning -- or word processing or filing.

Lawyers usually bill by the hour. Rates vary widely, but tend to range from $85 to $400 an hour.

An associate at a small San Francisco firm told litigation consultant Jim Schratz that a senior partner instructed him to bill for any time he thought about a case, even if it was in the shower.

"When you are getting paid by the hour," legal bill auditor Gary Greenfield said, "there is an inherent inefficiency. The more time you spend, the more money you make, so there is a disincentive to be efficient."

Associates, usually the less experienced lawyers in a firm, are fired if they do not meet minimum billing requirements. Some resort to billing for more time than they work. An hour may become an hour and a half.

"The pressure [to bill] is unbelievable, oh unbelievable," said a young San Francisco attorney who left private practice because she could no longer endure it. She is now a government lawyer.

"A lawyer may write a one- or two-sentence letter: 'Enclosed are responses to the interrogatories. Please get back to me,' " said Mr. Greenfield, founder of Litigation Cost Management in Oakland, Calif. "That is a 45-second letter that gets billed for 15 minutes. That is a widespread practice."

For one day, patent lawyer Lewis Eslinger billed clients a total of 25 hours. Mr. Eslinger, reached in New York, declined to comment.

Legalgard Inc., one of the biggest legal auditing firms in the country, has found that some firms charge more when the client is not paying particular attention to the bills.

John J. Marquess, chief executive officer and general counsel of the Philadelphia-based firm, calls it "cost-shifting."

Many lawyers also tend to train young associates or new lawyers at client expense, consultants said. When a lawyer leaves a firm or moves onto another project, the client may be billed for the hours it takes the new lawyer to become familiar with the case.

Firms also may charge for a partner's time to review an associate's work, part of the training process for new lawyers that consultants say should be taken into account when billing.

Challenging a lawyer about a bill often saves the client money.

"Most of them will very quickly cut 25 percent of the bill," said John W. Toothman, founder of Devil's Advocate in Virginia, a litigation consulting firm that examines legal bills, "especially if they think it will repair the relationship and keep your business."

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