Gross Profits? Questions About Lawyer Billing Practices

Hofstra Law Review, 1994

Do lawyers earn gross profits? That is, do lawyers earn "too much"? A recent survey indicates that a majority of people think that lawyers charge too much, 1 and the percentage of people who think lawyers charge too much has increased sharply in recent years, but is the public right? The Association of American Law Schools ("AALS") Section on Professional Responsibility organized this symposium to give us some data on that question. 2 At the live program, held on January 7, 1994, the entire audience consisted of law professors who teach and write about professional responsibility. In this written symposium, we hope to broaden our audience to include lawyers, law students, and other professors. We liked the title "Gross Profits?" because it gave us a lot of flexibility to talk about topics that are difficult to research in the library and are seldom covered in the classroom. 3 Eventually, we decided to focus on lawyer billing practices. But before we ask our three speakers to discuss billing practices, let me describe a number of topics that we could have addressed under the rubric of "Gross

Hofstra Law Review

agreements allowed consideration of "other factors" besides time, but Michael Romansky did not bother checking the terms of the contracts with particular clients. 16 After all, he (reportedly) had been making such adjustments in the time records of other lawyers for years. 17 As a result of an administrative error, the time records were sent to Dr. Siepser despite Romansky's contrary instruction. The client called the associate to question the bill. 18 As a result, Michael Romansky's billing practices came to the attention of the law firm. The managing partner deputized another partner, James Sneed, a member of the firm's professional responsibility committee, to investigate. 19 B. The Law Firm's Investigation In the course of investigating Michael Romansky's billing practices after the call from Dr. Siepser's office, Sneed asked Romansky to assemble and supply all his billing records for clients billed during the two months prior to the request. 20 Romansky collected these materials, and reviewed his files, providing explanatory notes on any "write-offs," "premiums," or "edits to pre-bills." 21 Sneed examined the material that Romansky provided to him for about sixty clients billed by Romansky during the fall of 1994, including explanatory "cover sheets" for "approximately ten to thirty files." 22 Also, he interviewed eight lawyers in the health care department of the firm. 23 The investigation revealed that during the two months in question, Romansky had increased the number of hours recorded by other lawyers on work done for Dr. Siepser 16. Id. at 21-25. 17. On Review of Report and Recommendation of the Board on Prof'l Responsibility at 29, In re Romansky, No. 163-96 (D.C. Sept. 2005) [hereinafter Post-remand Brief of Bar Counsel]. 18. An employee of Dr. Siepser's contacted Shay (the associate) to question the accuracy of the bill and to find out why more hours were billed than had been worked. Shay reviewed his records and confirmed that the bill reflected more hours than he had recorded. Dr. Siepser wanted to know why the hours had been increased, especially since his agreement with the firm provided that he would be charged solely on the basis of hours worked. Romansky was not available, so Shay sought guidance about the extra hours from another senior partner at the firm, who informed Charles Work, Esq., the managing partner. Hearing Comm. report, supra note 10, at 2-3. 19. Id. at 3. 20. Id. at 6. 21. Id. 22. Id. at 6; Post-remand Brief of Bar Counsel, supra note 17, at 28. 23. Post-remand Brief of Bar Counsel, supra note 17, at 28. Romansky urged that three drafts of the report from the firm's internal investigation should not be admitted into evidence because, he argued, they were hearsay, because the investigation lacked procedural safeguards, and because the report discussed "unproven, prejudicial allegations" that went beyond the scope of the charges. These arguments were rejected by the Hearing Committee and by the Board on Professional Responsibility. In re Romansky, Bar Docket No. 163-96, Report and Recommendation of the Board on Prof'l Responsibility at 24 (1999) [hereinafter 1999 Board Report]. 2006] BILLING FRAUD VERSUS MISAPPROPRIATION 851 and three other clients. 24 The table below compiles such information as I have on these incidents. 25 Hours Added to Time Records by Michael Romansky, October-December 1994 24.

Hofstra Law Review, 2006

In the 1970s, Monroe Freedman did a great deal of work trying to curb the tendency of the lawyer disciplinary system to go after the wrong people. During this period, Freedman and some other public interest lawyers were charged with ethics violations because they spoke up about problems they observed in the legal system. Freedman had dared to give a talk in which he urged that in some instances, a criminal defense lawyer’s duty to his client was more important than his duty of candor to the tribunal. Freedman defended some of the other lawyers who were charged with similar ethics violations. In the last thirty years, the District of Columbia disciplinary system has become less political and more professional. Even so, Freedman’s work to ensure even-handed enforcement of the ethics rules remains unfinished. Bar counsels still tend to bring most of their charges against solo practitioners and small firm lawyers. Disciplinary charges are

Sociological Focus, 2012

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SSRN Electronic Journal, 2000

Center for the Study of the Legal Profession, Georgetown University Law Center. We would like to express our appreciation to the Law School Admissions Council for funding the larger ongoing Law Firm Culture Research Project on which this article is based. We also would like to thank Elizabeth Chambliss, Jim Jones and Nancy Sachs for their insightful comments on a previous draft, and Elizabeth Chambliss for her valuable contributions as a participant in the early stages of the project.