Ethics: Simultaneous Billing Practices

Sunday, April 11, 2004 | 0

Legal fees in the workers' compensation industry take on two different flavors: applicant and defense. Applicant attorneys may get a contingency fee based on the case in chief, and may also get hourly fees for depositions under Labor Code section 5710. Defense fees are typically straight hourly fees.

But billing issues are becoming more common. With the value of workers' compensation cases on an inflationary trend, applicant attorneys are seeing their fees increase though there is little change in the quantity of work needed to produce the same results. Defense fees are going up as well due to supply and demand issues. A long standing issue with defense attorneys is simultaneous billing where the attorney makes an appearance at the Board on several matters and bills the same time on each file in recognition of the fact that there is inevitably significant "down time" while making appearances. In this article we're going to talk about the the ethical considerations of the defense attorney's practice of simultaneous billing.

The first consideration in either circumstance is California State Bar Rule of Professional Conduct 4-200 which states:

(A) A member shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee.
(B) Unconscionability of a fee agreement shall be 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. Among the factors to be considered, where appropriate, in determining the conscionability of a fee are the following:
(1) The amount of the fee in proportion to the value of the services performed.
(2) The relative sophistication of the member and the client.
(3) The novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly.
(4) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the member.
(5) The amount involved and the results obtained.
(6) The time limitations imposed by the client or by the circumstances.
(7) The nature and length of the professional relationship with the client.
(8) The experience, reputation, and ability of the member or members performing the services.
(9) Whether the fee is fixed or contingent.
(10) The time and labor required.
(11) The informed consent of the client to the fee agreement.

The State Bar's Standing Committee on Professional Responsibility and Conduct (COPRAC) issued an advisory opinion on the topic simultaneous billing practices in Bar Formal Opinion No. 1996-147.

COPRAC opines that an attorney may not bill a full hourly rate to more than one client for the same time period, or bill one client a multiple of that hourly fee for the same time period, unless the attorney has (1) disclosed the billing practice at the outset of the relationship; (2) obtained client consent; and (3) made sure that the fee charged to each client is not "unconscionable" under rule 4-200 ("fees for legal services") of the California Rules of Professional Conduct.

The key ethical factor so far as COPRAC is concerned is disclosure - did the client know that simultaneous bill will occur and did the client consent to the practice?

The typical scenario for the defense attorney is where the attorney attends status conferences in each of the four cases on the same day and spends a total of four hours at the Board. The issue posed is whether the attorney may bill four hours to each file as well as travel time.

First, COPRAC notes that attorneys have a professional responsibility to make sure clients understand their billing procedures. COPRAC asserts that an attorney who works on two matters simultaneously is not required to divide that time equally among the involved clients, but COPRAC takes the position that when an attorney bills the same time on more than one matter or for more than one client, the lawyer must fully disclose this practice to the clients and obtain the clients' consent to the fee arrangement.

Assuming that a client consents, COPRAC next addresses the issue of unconscionability of such fee arrangements. COPRAC says that a fee is unconscionable if it is an exorbitant fee that is wholly disproportionate to the services performed or if it is a fee paid for work which was not done or which is either redundant, excessive or unnecessary.

Would the amount of time billed on the file have been incurred regardless of the other appearances? Or, is the amount of time billed not reflective of what would have been incurred but for the other appearances?

COPRAC concludes that each situation must be individually scrutinized to determine whether work has actually been performed and whether the time billed to each file will not exceed that which would have been expended but for the fortuity of scheduling or the representation of multiple clients.

It should be noted that the ethics opinions of the State Bar Standing Committee on Professional Responsibility and Conduct are advisory only and each factual scenario may present a different set of issues and solutions.

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