Billable Hours -- A Story and a Question

To follow up on last month's post about the problems associated with billable hours, I recommend this very nice article about a Boston law firm that has taken these problems to heart and eliminated billable hours entirely.  The story is worth a read.

On a related note, I was chatting with a colleague about a particular billable technique that is both troubling and supposedly common.  The idea is that some lawyers bill for all of their hours in the office after 5:00 regardless of the time actually spent working on a client matter.  For example, if the lawyer leaves work at 8:00 p.m. and spent 30 minutes eating dinner (and did not work during dinner), the lawyer bills three hours, not 2.5 hours. 

This position was justified to me on the grounds that it is similar to travel time.  In the travel context, the lawyer is away from the office to serve a client's needs and may have trouble servicing the needs of other existing clients.  Accordingly, the lawyer is allowed to bill the time, even if she sleeps during the entire plane ride.  In the same way, the lawyer is supposedly making a similar sacrifice when she stays late to work on a client matter and so can bill for all of the time in the office.

The problem is that, unlike the travel context, where the lawyer is traveling because of the client's needs, the late-working lawyer is not necessarily staying late because the client demands it.  Rather, the lawyer is choosing to work on one particular client's matter at night, because she worked on some other matter during the day.  Put another way, it is often mere happenstance that a particular client's work gets done at night instead of during the day.  Why should the client have to pay more money simply because the work got done after 5:00? 

Now maybe the answer should be different if the client calls at 4:30 and needs something the next morning.  But even then, I don't see why the lawyer should be allowed to bill for non-worked time, just because the lawyer was in the office past 5:00.  It seems to me that the solution to this problem is to charge the client more money per hour if the client consistently makes unreasonable time demands.  The answer is not to bill for hours that weren't worked.

In any event, I had never heard of this billing "technique" before, and it sounded quite fishy to me.  It wouldn't surprise me, though, if it is widespread, given the pressures that many law firm lawyers face.  Indeed, this approach would likely add hundreds of billable hours to the lawyer's end of the year totals, so it is a "technique" of no small import. 

Anyway, does anyone know if there are bar opinions or other authority regarding this type of billing practice?   Aside from legal authorities, do law firms have guidelines as to what time should be billable in situations like this one?  I realize that some clients will create guidelines for the lawyers when the lawyers are retained, but in the absence of such agreements, what do you all think of this practice?  In my mind, it sounds unethical.  Am I out of touch?

Comments

[Adam Sulewski]

I don't know if I would label it flat out unethical - just as it is necessary to travel in the work for a client, it is also necessary to eat. If the lawyer is going to stay late and work to a point where it is dinner time and they are still at the office, the client should pay for the time spent eating. Otherwise, the lawyer will be tired, hungry, and unenthusiastic about their task - exactly not what the client needs in their attorney.

It seems unseemly, but I wouldn't begrudge someone for doing it. I believe many large firms actually have full time chefs who cook dinner in the office so attorneys don't have to travel to eat. Perhaps this is a way of ensuring (inadvertently?) that breaks for supper are short?

[Andrew Perlman]

You're right that law firms want the breaks to be short. But that's because the firms realize that the lawyers are not supposed to bill time during those breaks!

Your argument about why a lawyer should be able to bill during dinner would apply equally to lunch. Without lunch, the lawyer would be hungry and unenthusiastic. How about billing that time? How about billing for time spent talking to a significant other? If you can't talk with your signficicant other during the day, you might be unenthusiastic about your work. How about taking a walk outside for 20 minutes? That would certainly make one more enthusiastic about returning to work, but I can't imagine billing for that 20 minutes.

In short, the "I'm tired and need a break and will bill you for my break" reasoning doesn't really cut it in my mind.

[Eric Goldman]

If the client consents to pay for dinner, then this is perfectly legitimate. If it's a working dinner at the client's request, then this is perfectly legitimate. But otherwise, if the client pays by the hour, then it isn't ethical, and it's not even close. An attorney can't lie to the client and claim on timesheets that he/she was working when he/she wasn't. See, e.g., In re Lawrence. http://www.lasc.org/opinions/2004/04b0019.opn.pdf I remain amazed at the unlimited number of ways that lawyers come up to count <60 minutes as 60 minutes. Eric.

[John Steele]

Eric nailed it on the head. The basic test is (1) does the client understand the basis of the fee; (2) did the client agree to that fee; and (3) was the fee unreasonable (or in stome states, unconscionable)? I'd be very surprised if the hypo passed that test. But you might be amazed what some clients are more than willing to pay for.

[Andrew Perlman]

I agree with Eric and John. I am curious, though, how widespread this practice is. If it's widespread, it contributes to an enormous number of padded (i.e., unethical/illegal) hours around the country.

Do firms offer guidelines about this sort of thing? For example, do law firms give their lawyers information about what counts as billable time? Given that some lawyers seem genuinely unaware that some billing practices are unethical (e.g., double billing), it seems worth spelling it out quite clearly in firm documents. Do firms simply assume that the lawyers bill properly or (cynically) do firms prefer to keep the line a bit unclear?

[Dennis Tuchler]

I wonder how billing works under a no-billable-hour approach. How does a firm know how low it can bid a job and still make money? Won't the bid be based on an assumed number of hours worked by particular partners and associates? That is, won't records of hours worked have to be kept nevertheless to gauge how profitable a job is? If they have to be kept, the minimum-hours-worked for associates will continue to be in force, I suspect.

[wondering]

Here's a big reason why billable hours must fall: Senior partners often account to no one They can, literally, be in bed with a mistress and be billing. Who will question them? Read between the lines here.

[Judith]

Senior partners & junior partners are accountable to their clients. And more and more clients are aware how long projects should take, and how much they're willing to pay. I don't have a supervisor looking over my shoulder, but every one of my clients most definitely is keeping an eye on me.

Disclaimer: I'm a transactional attorney. As far as I can tell, litigators bill per breath.