Legal Ethics Corner

Ethics Corner is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association for SDCBA members.

 
Is Double Billing Ethical? It Can Be, But Be Careful.
 
Is double billing ethical? In Formal Opinion No. 1996-147 the State Bar’s Standing Committee on Professional Responsibility and Conduct (COPRAC) posits three hypothetical situations, all involving an hourly fee (as opposed to, e.g., value billing) which pose four corresponding questions: a) Attorney represents company 1 in four different cases, and appears at a status conference in each case on the same day spending a total of four hours. Can Attorney ethically bill four hours for each file? b) In addition to representing company 1, Attorney is also hired by companies 2-4. (Assume all conflicts of interests have been properly addressed.) Attorney attends a status conference for all four clients at the same time in the same case in which all have been sued, and the appearance takes 2 hours. Can Attorney charge each client two hours? c) Attorney’s fee agreement with company 1 provides that s/he charges an hourly rate for travel. During a six hour flight to New York for a case involving company 1, Attorney performs five hours work for company 2 on another case. Can Attorney charge six hours to company 1 and five hours to company 2?
 
COPRAC begins its discussion of the hypotheticals with a warning: "All three of the hypotheticals involve situations that could result in the charging of an improper fee if careful steps are not taken." The two primary issues which must be addressed are whether a client has given informed consent to the terms of the fee agreement, and if so, whether the fee is unconscionable under Rule of Professional Conduct (RPC) 4-200. "Either the lack of client consent or the finding of unconscionability of the fee would independently result in that fee being unethical if an attorney has billed for work performed on two or more client matters at the same time."
 
With respect to the client’s informed consent, COPRAC notes that the "relationship of attorney to client is of the highest fiduciary character" and that "it is well settled that attorney fee agreements must be fair, reasonable, and fully explained to the client." Consequently, even when a fee agreement generally allows for billing of travel time, it must also make clear that the Attorney intends to charge the time in full even if some of that time is also spent on another client’s matter. When the attorney fails to make this disclosure, "the lawyer cannot ethically engage in such billing practices. Thus, Attorney A may not bill two clients a full hourly fee for the same hour unless Attorney A has made it clear in the fee agreement that Attorney A intends to do so, and each client has consented." This is consistent both with general contract law and with an attorney's fiduciary obligations to the client.
 
The second consideration is whether the fee is unconscionable. Per RPC 4-200(A)"[a] member shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee." Unconscionability is "determined on the basis of all the facts and circumstances existing at the time the agreement is entered into except where the parties contemplate that the fee will be affected by later events." (4-200(B).) This rule lists 11 non-exclusive factors that are to be considered, where appropriate. (4-200(B)(1-11).) Among the most important factors for the above hypotheticals is "[t]he informed consent of the client to the fee." (4-200(B)(11).)
 
Of the hypotheticals, COPRAC concludes that if Attorney informs the client of his/her billing practice, and the client consents, "the hypotheticals do not create situations which rise to the level of unconscionability. In each scenario, the work was actually performed and the time billed to each file does not exceed that which would have been expended but for fortuity of scheduling and/or representing multiple clients. However, these scenarios also underscore the importance of disclosure and consent."
 
Many attorneys encounter hypotheticals similar to those in the above COPRAC opinion. Consider, e.g., a half hour drive to the courthouse for a case management conference for one case while you talk for 20 minutes on your cell phone with an insurance adjuster on another.  To determine whether your billing practices are consistent with the guidance provided by the COPRAC opinion, read it here (1996-147).
 
--Luis E. Ventura
 
**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**