Some Ethical Considerations Of Billing

Some Ethical Considerations Of Billing

Some Ethical Considerations Of Billing

A law practice’s method of billing may directly impact the financial viability of the practice and is an important component of an individual lawyer’s ethical and professional obligations. Most states grant lawyers a large degree of discretion to develop billing practices that are suitable to the law practice and beneficial to the client. However, the billing practices of a law firm are not solely important because of the necessity to ensure the firm’s financial stability, but because attorneys have an ethical duty to engage in proper billing practices.

A primary focus of attorneys throughout their practice is the collection of outstanding fees. At some point in their legal careers, if they do not know it already, attorneys learn that some billings are harder to collect than others. Attorneys should engage in an ongoing process of assessing their billing practices to seek new ways of improving them.

In California, the foremost ethical consideration for attorneys related to billing is that any billed fees may not be unconscionable or illegal. RPC 1.5 sets forth several factors used in determining the unconscionability of a fee, including the following:

(1) whether the lawyer engaged in fraud or overreaching in negotiating or setting the fee;

(2) whether the lawyer has failed to disclose material facts;

(3) the amount of the fee in proportion to the value of the services performed;

(4) the relative sophistication of the lawyer and the client;

(5) the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(6) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(7) the amount involved and the results obtained;

(8) the time limitations imposed by the client or by the circumstances;

(9) the nature and length of the professional relationship with the client;

(10) the experience, reputation, and ability of the lawyer or lawyers performing the services;

(11) whether the fee is fixed or contingent;

(12) the time and labor required; and

(13) whether the client gave informed consent* to the fee.

RPC 1.5 also states that any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a dissolution or annulment of marriage or upon the amount of support or maintenance, or property settlement, is prohibited, except in connection with the recovery of post-judgment balances due to child or spousal support or other financial orders.

The division of fees between lawyers in separate firms may be made only under certain circumstances as regulated by RPC 1.5.1. Lawyers who are not in the same law firm may not divide a fee for legal services unless: (1) the lawyers enter into a written agreement to divide the fee; (2) the client has consented in writing, either at the time the lawyers enter into the agreement to divide the fee or as soon thereafter as reasonably practicable, after full written disclosure to the client (i) the fact that a division of fees will be made; (ii) the identity of the lawyers or law firms that are parties to the division; and (iii) the terms of the division; and (3) the total fee charged by all lawyers is not increased solely because of the agreement to divide fees. This rule does not apply to a division of fees pursuant to a court order.

Rule 1.4 of the California Rules of Professional Conduct describes a lawyer’s duty to communicate with a client. It provides that “[a] lawyer shall . . . keep the client reasonably informed about significant developments relating to the representation, including promptly complying with reasonable requests for information and copies of significant documents when necessary to keep the client so informed. . .” The generation and transmission of accurate and honest billing statements regularly may be considered complying with Rule 1.4 and the Rules of Professional Conduct.

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