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How Widespread Is Unethical Billing?

By William G. Ross
September 28, 2007

As most consumers of legal services are well aware, time-based legal bills present many opportunities for inefficient, careless, and dishonest lawyers to inflate legal fees. Clients, judges, legal scholars, and even many lawyers have assailed hourly billing for providing lawyers with an incentive to work beyond the point of marginal utility and for generating fraud. Indeed, the padding of legal bills is practically the 'perfect crime' because it usually is almost impossible to detect. The high number of hours that many law firms demand of their attorneys is widely believed to have encouraged billing abuses. In order to promote better accountability, clients have increasingly scrutinized legal bills, often with the assistance of legal auditing agencies, and are often requiring lawyers to abide by guidelines that prescribe detailed procedures for billing practices.

Aside from a few sensational disbarments and criminal prosecutions for overbilling, most evidence of billing irregularities is anecdotal. In order to provide a more precise assessment of the scope of the abuse of time-based billing by attorneys, I conducted nationwide surveys of outside counsel in 1991, 1995, and 2007. The large majority of respondents to all three surveys ' 82% in the most recent survey ' indicated that time-based billing was their dominant method of billing. Respondents to all three surveys had a wide range of seniority and types of practices. The first two surveys were returned by attorneys from the full spectrum of firm sizes. Although the third survey was directed at lawyers in all sizes of firms, nearly all of the 251 respondents reported that there were 25 or fewer lawyers in their firms. While the 2007 survey therefore is based almost entirely on attorneys in relatively small firms, the results of the most recent survey are generally very similar to those of the first two surveys.

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