Fair Deal for All Clients

Lawyer Gerald F. Phillips takes on attorney billing

In Fair Deal lawyer Gerald F. Phillips tackles attorney billing, which has been a subject of great consternation for clients and law firms for many years. He knows his subject inside and out. As a partner in the legendary New York firm of Phillips Nizer, as well as vice president in charge of litigation for United Artists, legal committee chair of the Motion Picture Association of America, a testifying expert in fee disputes, and as a mediator and arbitrator, he has prepared, reviewed, and challenged countless attorney bills. As a result, the principles and suggestions he lays out in the book have broad application to all paid attorney-client relationships. Indeed, the book's target audience is not limited to lawyers but also includes clients, law students, and the general public.

Without the dense analytics and legal jargon permeating other writings on the subject, Phillips furnishes each category of his readers with information and tools to ensure that billing is fair and evenhanded - especially in the hourly billing structure. Fair Deal, which includes numerous citations to studies, cases, and other authorities, will also be useful to litigants, judges, and special masters looking to challenge excessive attorney fees in court.

Phillips does not make a case against hourly billing per se but against the framework in which it is used - with bonuses and profit distributions based on hours billed. This framework often pushes lawyers to pad their hours, as well as engage in make-work assignments and even phantom projects. Indeed, Phillips discusses the myriad ways attorneys pad their hours and how to spot them: from block billing and rounding up time to vaguely worded entries that fail to demonstrate why time billed was reasonable and necessary. In his analysis, Phillips also addresses issues of overstaffing and redundant or unnecessary work.

Fair Deal also directly addresses the tension between fair billing and attorney compensation. Onerous billable-hour requirements at firms coupled with bonuses based on hours billed create a strong incentive for bill padding. However, Phillips strikes an off-key note with his proposed solution: getting rid of bonuses for billing more hours. Although the lack of a financial incentive in his proposal will make attorneys less likely to pad their bills, his solution ignores the negative impact it would have on the morale of ethical, hardworking associates. For example, if associate A, billing 1,500 hours per year, is paid the same as associate B, billing 1,900 for comparable-quality work, it won't be long before associate B seeks employment elsewhere.

Readers might give greater weight to a more complex solution Phillips proposes: Law firms should train, counsel, and if necessary discipline attorneys to avoid bill padding. Though bill padding may initially provide considerable economic benefits to both the firm and the attorneys involved, it fosters a culture lacking in integrity that, when exposed, has cost many attorneys their careers and several law firms their stature. Unfortunately, bill padding still seems to be ignored and even implicitly encouraged.

That being the case, Phillips offers advice to clients on negotiating fee arrangements, as well as tips on how to spot and negotiate against improper billing. Most of these tips are familiar to lawyers, but one truly resonates as a powerful new idea: Clients should inquire about minimum billable-hour requirements, and be wary of firms that require associates to bill 2,000 hours or more.

Phillips cites analysis showing the practical reality of billing more than 2,000 hours a year: If honestly billed without padding, that number will generally equate to being at work more than nine hours per day every single day of the year - including weekends and holidays - and with no vacations. In other words, if honestly calculated, the lawyer would be billing at an unsustainable pace over the long term, which at some point must surely result in substandard work. Otherwise, such totals must be the result of bill padding, or outright fraud. Phillips recognizes that sometimes such a pace is necessary in the short term, but if it is the required annual minimum, 2,000 or more hours should be a red flag for all clients (as well as prospective associates).

Fair Deal has numerous practical suggestions for attorneys determined to bill fairly and to be paid for their work. One nugget for attorneys billing on an other-than-hourly basis is to always record your time hourly so you can justify your total fee. Otherwise you may be hard-pressed to support the fee if challenged when seeking to recover for a prevailing party or in a billing dispute.

In his book, Phillips largely draws from three sources: reported cases, secondary sources from bar associations to ethicists, and his own considerable experience. His survey of the first two sources is comprehensive, succinct, and incisive. But in a second edition, Phillips might tighten the connection between his anecdotes and his larger principles.

In sum, Fair Deal is a valuable resource for anyone looking to better understand hourly attorney billing and how to ensure that both clients and attorneys get the fair deal promised in the title.

Richard S. Amador, managing partner of Sanchez & Amador in Los Angeles, represents corporate clients throughout California in employment and business litigation.

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Kari Santos

Daily Journal Staff Writer

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