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January 27, 2004

One good reason for value billing.

Carolyn Elefant asks the question on MyShingle.com: "How do you know if your big firm lawyer is overbilling?" While I want to answer, "Because he's breathing," I got to thinking about an article I read several weeks (months?) ago about a firm that got in trouble by billing two clients tens of thousands of dollars (in hourly billing) for the same product. The firm's deceit was found out because they failed to erase the metadata in the documents they sent the second client.

While my initial instinct is to say how awful the law firm's conduct was, was the client harmed? The client got a product (the documents, advice, etc.) that they valued at a price they were probably willing to pay. In this case the value received by the second client was at least as great as that received by the first (for whom the hourly work was done to begin with). And while the firm's conduct was dishonest, to say the least, should the second client have been charged significantly less because the documents were already "in the system" and just needed to be revised?

This is the dilemma many lawyers face when trying to bill hourly when they have become proficient at any given task. If my technology investment allows me to complete a task in one-third the time it took me last year, does that task become two-thirds less valuable to my client? Staying away from hourly billing should allow lawyers to maximize their revenue, capitalize upon their efficiencies, and keep their law licenses.

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Comments

Value billing is not the only solution to overbilling. A new "billing assurance" software product called SureTime is designed to authenticate hourly billable time by combining an activity trail both on and off the computer with any time sheet or invoice. http://www.suretime.com

You've sure been prolific this week, Matthew. I hope you'll click on the ethicalEsq TrackBack link above and give us all your thoughts on the issues raised there regarding value billing and reasonable fees.

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