April 4, 2018 – Can you bill a client for preparing the bill for the client, or is that an unreasonable fee? Does the thought of it make you queasy? Turns out, it may be all about consent.
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Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel org tpierce wisbar Timothy Pierce and assistant ethics counsel org akaiser wisbar Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.
As a State Bar member, you have access to informal guidance in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys. To informally discuss an ethics issue, contact Pierce or Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m. to 4 p.m.
I recently graduated from law school and took a job at a small law firm. The firm uses hourly billing for most matters. When discussing the firm’s billing practices with one of the other lawyers, I was told that I should bill the clients for time spent preparing the client’s bill, opening the file, and other administrative matters. I feel a little queasy about this.
Is it permissible to bill clients for time spent preparing the bill?
This is the situation that was considered in Attorney Grievance Commission v. Kreamer.1
In this disciplinary case, one of the counts against the respondent lawyer was based upon her billing practices, which were described as follows:
Ms. Anderson did not realize that Ms. Kreamer was charging her for things which should properly be considered as office overhead such as setting up a file, revising accounting records, etc. For example, Ms. Kreamer improperly billed Ms. Anderson 15 minutes time on September 23, 2003 for what she described as “file organization and time sheet.” At the time that Ms. Kreamer billed Ms. Anderson for this, the only documents in her file were her initial notes and a Financial Statement prepared on April 29, 2003. This task, according to Ms. Kreamer, involved merely putting Ms. Anderson's name on a file and putting documents in a file. She did nothing more than take a pre-printed form and place Ms. Anderson's name on it. Ms. Kreamer also charged Ms. Anderson other billing statements for “reimbursement of fees and review and revise accounting.” This involved doing nothing other than filling out a deposit slip and updating her accounting records.
The hearing officer concluded that such billing practices constituted charging the client an unreasonable fee in violation of MRPC 1.5.2 The Maryland Court of Appeals agreed, stating:
MRPC 1.5(a) requires that an attorney charge a client reasonable fees and sets forth various factors to be considered in determining reasonableness. The Rule deals not only with the determination of a reasonable hourly rate but also with the reasonableness of costs and the total charge billed to the client. While the Rule clearly allows attorneys to charge for work performed during the representation and to seek reimbursement for costs of services or expenses undertaken during the representation, we do not find it reasonable, under the circumstances presented, for Respondent to separately charge her clients for “accounting services.” We view “accounting services” as an overhead expense incidental to the practice of law. As the American Bar Association's Standing Committee on Ethics and Professional Responsibility expressed in Formal Opinion 93–379, entitled “Billing for Professional Fees, Disbursements and Other Expenses”:
When a client has engaged a lawyer to provide professional services for a fee (whether calculated on the basis of the number of hours expended, a flat fee, a contingent percentage of the amount recovered or otherwise) the client would be justifiably disturbed if the lawyer submitted a billto the client which included, beyond the professional fee, additional charges for general office overhead. In the absence of disclosure to the client in advance of the engagement to the contrary, the client should reasonably expect that the lawyer's cost in maintaining a library, securing malpractice insurance, renting of office space, purchasing utilities and the like would be subsumed within the charges the lawyer is making for professional services.
Clients do not hire attorneys with the expectation that they will be charged for the attorney's time in preparing a bill for the services rendered. Administrativetasks, like accounting services, are best left to the general services the lawyer or his/her staff provides during the representation of the client.
The court relied upon the still influential ABA Formal Ethics Opinion 93-379 for the proposition that it is unreasonable to bill clients for time spent on administrative tasks that are only ancillary to the provision of legal services to the client.3
It is also noteworthy that the court stated that time spent on administrative tasks could be billed to the client, with the consent of the client.
In Case You Missed It: Read Past Ethical Dilemmas
Ethical Dilemmas appears monthly in InsideTrack. Check out these topics from recent issues:
1 404 Md. 282, 946 A.2d 500 (Md. 2008).
2 Wisconsin’s equivalent rule is SCR 20:1.5.
3 In Disciplinary Proceedings against Gilbert, 227 Wis. 2d 444, 595 N.W.2d 715 (1999), the Wisconsin supreme court found that it was unreasonable for a lawyer to bill time consulting an “ethics expert” to the client.