How Lawyers Cheat and Swindle Their Clients – Chapter 4 – Accounting By Lawyers

by EzekielDiet.com
Posted on Jan 11, 2016

EZ Diet Comment:  This is Chapter 4 of the free eBook below. This is what you need to know if you’re ever sued, or decide to sue someone else. Unless more people recognize this problem and become conscious of the extent to which lawyers and the legal system manipulate the general public, the situation can only deteriorate further.

How Attorneys Cheat and Swindle ClientsCHAPTER FOUR

ACCOUNTING BY LAWYERS

#1 Billable Hours

The term, billable hours, is something that attorneys become very familiar with as soon as they graduate from law school. The ability to generate billable hours is what major law firms are looking for; more than any other talent or skill, generating billable hours gets attorneys a plush office and a big pay check.

In How Not To Get Screwed By Your Lawyer, Gray quotes Abraham Lincoln: “A lawyer’s time is his stock and trade”. It’s a phrase to take literally.

If you ever received a bill for an attorney’s time, you probably had the nagging feeling that you were being grossly overcharged. You can rest assured that you are not paranoid and that your suspicions were probably justified. Overcharging for legal fees is so ingrained in the system that it has become…an accepted practice…At many large firms, it has become a requirement. In addition to salaries, large law firms typically spend considerable amounts of money for office space in high-rent office buildings and auxiliary expenses like plush office furnishings and fixtures to impress clients.[1]

Attorneys learn very quickly how to generate billable hours and thus how to rip off their clients. As Gray’s anecdotal fledgling attorney peruses, “forty hours a week at $100 per hour adds up to $200,000, not $300,000…Where does the other $100,000 come from?”

“Billable hours…that’s what it’s all about. How many dollars you can squeeze out of every file. The trick is how to make forty minutes equal an hour, and it’s not at all difficult…”[2]

Any time your attorney spends working on your case, you will be charged. Sometimes when they are not working on your case, you will also be charged. It’s important that you, the client, review every bill your attorney sends and it’s important that you carefully review the number of hours you are being charged for.

Trick #1: “A phone call is time, and time is money”

Most legal cases require attorneys to make phone calls. They may call you to discuss an issue. They may call your associates, your opposition, or your opposition’s attorney. Your lawyer may also call other lawyers, expert witnesses, and secondary people. Every time they make a phone call, you will be billed for the time.

To avoid overcharging on this item, insist that your attorney keeps a time log of the time they spend on each phone call. Make sure you also keep a time log of phone calls with your attorney. Find out if there is a minimum charge per phone call as some firms bill for a minimum of, say, one fifth of an hour.

Trick #2: “One of the best ways to build up your hours is to review the file.”

You also need to keep an eye on billing items that fall into the categories of case reviews. To pad their hours, many attorneys bill for “reviewing” your case file. This covers a multitude of sins, as Gray explains in his anecdotal story of the fledgling attorney:

“Review the complaint, the answer, the depositions, the interrogations, the documents, the legal briefs, the motions – review it all. Now, review doesn’t have to mean sitting down and actually reading the file. If you think about the case when you are driving to work or going home – even when your taking a shower – you are reviewing the case, so bill for it. You spend two hours a day driving too and from work; think about the case and don’t forget to record the time…”

“Another important tip: Get to know your opposition. He is not your enemy. On the contrary. He’s probably a junior associate, just like you, and is trying to get ahead. You can get ahead together. Take him to lunch and discuss the information you need. He’ll appreciate it. He has billable hours and so do you….”

“If you have a question, don’t hesitate to get in touch with one of your colleagues at the firm and ask his opinion. Back this up in your file by inserting a memo that says, for example, “I would appreciate the comments of the Real Property Division before proceeding further.” That will give you backup in case the client questions the bill.”[3]

Question items on the bill that look to be padded time, particularly if the item is related to reviewing the case. Don’t underestimate the guile of attorneys when it comes to bill padding. In the case involving the Los Angeles Police Department versus Rodney King, the losing party was obliged to reimburse the winning party for legal fees and expenses incurred during the trial. According to Gray’s notations, Rodney King’s attorney’s billed him for $4.4 million dollars; the bill was passed on the City of Los Angeles, which was also obliged to pay King’s $3.8 million dollars in damages. Among the listed items, King’s attorneys had charged $81.25 for reading a newspaper article about the trial, $650.00 for attending King’s birthday party, and $1,300.00 for accompanying King to see the film Malcom X.

Why You Should Worry About The Bill

In one way or another, extravagant bills passed on to city and state authorities end up being paid for by the tax-payers. To stop extravagant billing at this level, it is necessary to stop it at the grass roots level.

Strongest arguments exist against the use of the hourly rate for billing, which is, after all, the most common form of billing among attorneys. One of the strongest is that hourly billing rates rarely encourage lawyers to get a job done quickly. Lawyers are difficult to sue and their work is difficult to keep track of. They often get away with overcharging clients so there is no real risk to them stalling on their work.

To facilitate the best possible outcome for your legal case, at the best possible cost, you should establish your intention to keep a tight reign on your purse strings and to dispute billing discrepancies. Moreover, you should arrange with your lawyer that if the work is completed satisfactorily within a certain time frame, you will pay them a bonus. If the work is not completed satisfactorily or if it takes an unnecessarily long time, you should make clear that you will dock the payment. The way to control a lawyer is to appeal to their greed: pay them well if they do a good and fast job. Don’t pay them if they do a bad job and stall your case.

#2 Stalling The Legal Process

Aside from watching the bill and billable hours, knowing as much as possible about how your case can or should be handled will help you to keep down your legal costs and push your lawyer to do a good job quickly.

A number of important legal processes should become familiar to you, the first of which are writs and motions. Remember that your familiarity with these processes, what they are intended to do and how lawyers abuse their practice, may save you a lot of time and money in your legal battle.

Two of the most basic aspects of the United States legal system relate to the notion that it is unlawful to undertake any legal action without offering the opposition “proper and timely” notice of the action you have taken. Writs and motions are behind this principle.

However, you need to monitor the writs and motions filed in your case. “There are lawyers – and not just a few of them – who do nothing but file frivolous motions so they can bill for the court time”[4]. Attorneys are required to appear before a judge to review and verify all motions filed, providing excellent billable hours and opportunities for bill padding.

Discovery is “the disclosure of that which was previously hidden” and in law it is used to facilitate the discovery of the truth of a case and, although this is rarely the outcome, to facilitate dispute settlement.

Unfortunately, lawyers tend to subvert the process of discovery and turn it to their advantage. An incredible 80% of legal bills owed by American companies comprised of charges for discovery. In most major and medium-sized law firms, attorneys pad their bills for discovery by gathering essentially useless volumes of information, and unrelated documents. Documents are rarely read by discovery attorneys, or anyone else you are paying, for that matter.

Discovery charges are not only used to pad bills to clients, they can be used to push your opposition over the edge financially.

Too often today, lawyers are using discovery rules not to find the facts, but to force a financially weaker opponent to surrender by making costly demands for documents and voluminous and often unnecessary interviews of possible witnesses.[5]

If your case involves discovery, be sure to keep tabs on this as well. Don’t just ask to see the documents, because most lawyers will be able to pass them on to you. Ask to know precisely how the information is being used to further your case; less is generally more.

Interrogations are written questions used by lawyers to formally request particular information from the opposition. Once a complaint is filed in the court the first set of interrogations are sent by mail to the opponent’s counsel with instructions on how answers should be provided.

Beware that interrogations often run to second, third, and fourth sets of questions back and forth between opposing lawyer parties. You or your opponents can also object to answering questions put before you, leading to motions to compel, affidavits and declarations, and legal briefs supporting them.

When you check the bills from your attorney, look out for interrogations. If the amount looks excessive, ask for clarification and be prepared to find another attorney.

You should keep a particularly close watch on depositions. In legal cases, a deposition is an examination of a witness taken under oath, with every word taken down verbatim by a court reporter.

Depositions are particularly costly and can be abused in several ways. One of the most common abuses is the practice of deposing everyone who has a remote connection to the case. The second method of abuse is the practice of asking many unnecessary and off-topic questions of each witness, resulting in pages of questions and answers from the witness that have no bearing on the case.

As you have to pay for the attorney’s time and all elements related to the production of a transcript (the court reporter, the paper, the printer ink, etc), it is worth your while to also keep tabs on your attorney’s use of depositions; again being prepared to challenge the bill and to walk away if you have trouble.

If your case does go to court, as discussed earlier, you also need to be aware of the Mandatory Settlement Conference that will be required in relation to your case. Most courts in America have mandatory settlement conferences as part of the judicial process. The purpose is to have both sides and their attorneys appear before a judge to discuss the case and attempt to facilitate reconciliation.

There are, however, a number of problems with the mandatory settlement conferences:

Mandatory Settlement Conferences (MSCs) are ordinarily held after discovery has been completed and huge attorney’s fees have piled up. Similarly, courts of appeal establish settlement conferences, but only after briefs have been filed and extensive legal fees have been charged.[6]

You are at risk to be billed excessively for your attorney’s efforts relating to the MSC as well. Not only will you be billed for the actually time spent before the judge, but your attorney is likely to review notices relating to the MSC and to make further use of the time.

Keeping a handle on your attorney is important. It is a violation of your rights if your attorney charges you excessive fees and it is your attorney’s responsibility to do a good job with your case.

Consider the following notes on excessive fees presented in a general guide to attorney’s responsibilities and client’s rights:

All fees must be reasonable based on the circumstances…

Whether the fee is excessive depends upon the circumstances. What seems excessive may actually be considered a reasonable fee. Based upon the lawyer’s location, the community where they lawyer practices, the customary charges in the area, education, expertise, and experience, and size of the law firm, as well as the complexity of the matter, a lawyer’s rates may seem exorbitant, but indeed be considered reasonable…The standard to determine if the fee was excessive is based on asking if the fee charged was so exorbitant and disproportionate to the service rendered that a person’s conscious would be shocked.[7]

If you think you are being overcharged, attain answers to the following questions:

How much time and labor was actually required? Is it reasonable that the work could have taken substantially less time than your lawyer charged you for?

What was the level of difficulty for the task or for the case? Was the issue familiar to the lawyer? What special skills did the lawyer have to exercise to complete the work?

Did your case require your lawyer to neglect other work and turn down other work?

What is the standard fee charged in your area for the work that your lawyer completed?

What is your attorney’s reputation and standing within the legal community? Are they considered experts in the area of legal practice with which your case was concerned?

If the case involved damages or money, how much money was involved and what was the outcome of the case?

Did you impose time limitations on your attorney? Did circumstances impose time limitations?

What is the nature of your professional relationship with the lawyer who handled your case?

What are the lawyer’s levels of experience, reputation, and ability?

Was the fee fixed or contingent?

Review your answers to these questions and be prepared to take up any issues with your lawyer and the bar association.

[1] Gray, et al (1996).

[2]Gray, et al (1996).

[3] Gray, et al (1996).

[4] Gray, et al (1996).

[5] Gray, et al (1996).

[6] Gray, et al (1996).

[7] Hershkowitz Singer (2003)

See Prior Chapters Posted:

Chapter 1

Chapter 2

Chapter 3

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