Thursday, June 28, 2018

Attorney Fees and an Indictment in Texas

There is an old saw that pokes fun at lawyers. I have heard it told many times, each time a bit differently. But, in each iteration there is a lawyer who is dead or dying and engages in a conversation with St. Peter at the gates or some other angelic figure. Learning of her/his demise, the lawyer protests about young age ("but, I'm only 40" etc.). The response, the punch line, is something to the effect of "according to your billable hours you're 197." 

LOL - the punch line illustrates that the lawyer is over-billing her/his clients, and depending on the number used in the punchline, the transgression might be slight of egregious. 

This came to mind recently when published a series regarding indictment in Texas. See Lawyers Concerned After Indictment, New Data on Top-Billing AttorneysThis recounts that a "claimants' attorney was indicted on charges of over-billing and fraudulent billing." The attorney, Leslie Casaubon has been accused after an investigation allegedly demonstrated inflated billings. The indictment is here.

In Texas, the hours billed by workers' compensation attorneys on both sides are submitted to the state and maintained in a database. WorkCompCentral reports that a search of that database revealed one lawyer who "billed for more than the 8,736 hours that are in a calendar year." To be clear, 24 x 365 = 8,760; 24 x 364 = 8,736. That lawyer allegedly claims to have worked every day, Saturdays, Sundays, and holidays, and to have worked in excess of 24 hours a day on some of those days. 

This is not the first time that interesting time accounting has made the news. See Overtime Anyone.

How is that possible? That is a reasonable question. 

I was asked years ago to testify in a case as an expert regarding attorney fees. That process requires review of a file, the claims and defenses, the effort invested, and determining whether the hours invested and the rate claimed are "reasonable." I found some mathematical curiosities in my review of that file. When I asked the attorney that had hired me to testify, about those anomalies, I was told that it was her/his habit to take credit for any work performed by her/his paralegals. Thus, if four hours were spent by a paralegal organizing and summarizing medical records, the attorney would attest under oath that the time was the attorney's time. The attorney would seek payment for that time, expended by paralegals, as attorney time. 

As I recall, I did not end up testifying in that case. 

In another case in which I was asked to testify, I noted similarities in various time entries. When I inquired about the striking similarities ("letter to client re status, .30 hours"), the attorney that had hired me to testify explained this "is how everyone does it." Does what? The attorney explained that when you take your car to the shop they have a book that states a time for each repair a car might need. To replace a starter might be listed in the book at 2 hours. If the repair actually takes one hour or three, the shop charges two hours. It is the "standard" charge. The attorney explained that she/he used the same process. So, a one line letter to a client reminding of an upcoming appointment for a deposition or a mediation, which required literally seconds to dictate or type, would be charged at 18 minutes (3 tenths of an hour). The attorney explained this was easier for the client to understand, rather than having to explain why some letters took longer or shorter time than others. 

As I recall, I did not end up testifying in that case either. 

When I was in law school, I interviewed for a job with a law firm which bragged about its regional footprint in a state. The interviewing partner assured me that meeting the firm's billable hour budget would be easy because I would spend so much time driving around the state to hearings and other proceedings. The secret, she/he confided was to schedule multiple events on the same day in a remote place, and bill each file for the trip. That is, if a lawyer had a hearing in a city an hour away from the office in case "A," the lawyer should also schedule a deposition in that city that day in case "B," and a conference with a doctor in that city in case "C." The travel time would be an hour drive to that city and an hour back; however, the combined two hours travel would be billed in each of "A," "B," and "C." Thus, two hours actually invested becomes six hours of billing. 

I did not end up returning to that firm for a second interview. 

WorkCompCentral reported that the Texas legal community now wonders if further investigations will occur in light of the indictment and the resulting scrutiny of time records in the database. State officials have noted that 
“All attorneys in the system should take a close look at their reported hours and fees, and confirm those reports are accurate,” 
The story explains the math above, and also notes examples of attorneys reporting 17 to 24 hour days throughout a year. The numbers are somewhat curious. It also quotes attorney sources saying "it's difficult for anyone to work more than 2,000 hours a year." It may also be difficult to bill every minute of the workday (some tasks in the day may simply not be billable). The article concluded that defense fees listed in the recent report were "a little lower" by comparison but "still strained credulity."

Some attorneys assert in explanation that time included in a particular year's reporting may be associated with a prior year's work. Others note that work performed by an associate attorney who departs a firm might "have to be" billed, or at least reported to the state, under some partner's name following the departure. 

The question being asked is whether anything untoward is occurring in Texas. Obviously, one grand jury thinks it has with one lawyer, thus the indictment. Whether that attorney is subjected to criminal penalty or suspension of her license to practice law will be seen in time. It is entirely possible that the accused will be vindicated when all of the evidence is presented. 

But, the question this raises is whether it makes sense to have a database through which all attorney time and billing must pass? It is possible that the time reported in Texas is all explicable, based on accounting issues (last year's time in this year's billing, departed associates, etc.), and there is a possibility that it is misrepresentation (WCC cites a previous example case in which a lawyer was suspended for illegally including "legal assistant's time as his own," as discussed in the example above). But, regardless of the explanation of the numbers, the existence of the Texas database has led to questions being asked. 

The WorkCompCentral article lists the top ten attorneys in both claimant and defense categories, listing the aggregate fees. It also notes that it has requested additional information from the Texas Division, with the suggestion that further investigation and reporting may be forthcoming. 

Should states track and report attorney fee collections in this  detailed manner? Would a Texas-style reporting system and database be a benefit or a burden, a valid measure or distraction? The Texas database will perhaps be a subject of discussion as the present indictment proceeds or as further investigation occurs. It is an intriguing topic. 

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