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Huh? Lawyer’s Overbilling Blamed on Law School’s Failure To Teach Practice Management

by Carolyn Elefant on August 30, 2010 · 13 comments

in Ethics & Malpractice Issues, Law Practice Management, Mistakes/What NOT To Do

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Law schools today get a bad rap, often deservedly so. From outrageous tuition to to ineffectual, elitist law professors to fraudulent post-graduation employment statistics to failure to teach practical skills, law schools have become the scapegoats for everything wrong with the legal profession.

Including theft over-billing. Yes, you read that right.  Lawyer coach Rjon Robins blames law school for Ohio lawyer Kristin Stahlbush’s two-year suspension (one year stayed) for submitting “false and fraudulent” time records claiming 3451 hours of court appointed work for 2006.  Sadly, Stalbush’s conduct wasn’t a one-time occurrence either.  In addition to submitting three bills reflecting more than 24 hours of work in one day, one of Stahlbush’s bills showed 90.3 hours of work during a 96 hour period, while another showed 139.5 hours of work during a 144 hour period. All told, Stalhbush would have had to work an impossible schedule of 10 hours a day, 365 days a year to account for the time billed to the court in 2006.

Notwithstanding that the Ohio Supreme Court found that Stahlbush gave “patently false testimony” about having worked all of the hours billed, and that “poor record keeping alone cannot explain over-billing of such magnitude” [Opinion at 7], Robins lashes out at the “self-righteous” commenters who criticize Stahbush’s ethical transgressions, while giving her a pass.   Instead, Robins portrays Stahlbush as a casualty of a legal education system that fails to prepare lawyers for real world practice:

The sad fact of the matter is that law schools do a generally poor job of preparing graduates to deal with the practical realities of managing the business-side of a law firm. And there are very few CLE programs offered which focus on the practical realities of managing a law firm in the real world.

That is a world which exists with a hundred different demands, distractions & demands that a solo lawyer or owner of a small law firm function as both an effective advocate, counselor & adviser AND ALSO an effective owner, operator and manager of their business too….

Perhaps if Ms. Stahlbush had been properly trained to start, effectively manage and even profitably market her law firm this situation could have been avoided.

What?  Is Robins claiming that if law school had taught Stahlbush to manage her timekeeping properly, she wouldn’t have lost track of her hours and submitted invoices totaling 3451 hours for court appointed work? Or that if Stahlbush had taken a practice management course in law school and learned to run a profitable practice, she wouldn’t have had to bilk the court system to make up the shortfall?

Either way, Robins is dangerously wrong. If a lawyer doesn’t realize that a bill totaling more than 24 hours for a for a day’s work is flat wrong, frankly, she’s beyond help — and all of the practice management training in the world isn’t going to make a difference.  Moreover, running a profitable practice doesn’t guarantee that lawyers won’t steal – if it did, we wouldn’t see cases like this one involving a biglaw partner and his marketing consultant wife charged fraud for submitting $400,000 in false bills to the San Francisco school district and insurers for the treatment of their autistic son.

In today’s economy, there are hundreds of lawyers who are struggling to make ends meet. Presumably, like Stahlbush, they too endured a law school education devoid of practice management, yet they’re not concocting fraudulent bills or stealing from clients and the court kitty.   Moreover, to excuse Stahlbush is a slap in the face to those lawyers who are having financial difficulty and juggle the myriad of demands required in running a law practice, but who would never dream of compromising their ethical obligations and personal integrity.  That’s called character, and you know what?  They don’t teach that in law school either.

[Update 8/30/10 7 am]: In re-reading the comments on the original story, I saw that along with law school, the billable hour is also identified as another rationale for Stahlbush’s conduct. For example, Robins commented that “There is no such thing as “over-compensation when you break the habit of the billable hour and embrace flat-fee, value-based-billing,” while others suggested that the billable hour only encourages lawyers to pad their time. Listen, I’m no fan of the billable hour either, but I’m not even sure why it’s an issue here. For starters, the billable hour was the court’s requirement, not necessarily Stahlbush’s preference. If a client demands time-keeping in a certain way, then we lawyers can either do what they ask, or find another client. If Stahlbush didn’t want to go through the trouble of keeping accurate time records, she should have found clients on her own instead of getting them through the court system.

Moreover, just like lack of training doesn’t force lawyers to act dishonestly, neither does flat fee billing. If anything, flat fee billing demands a higher level of trust, because there’s less accountability: at the end of the day, the client takes the lawyer’s word that the proposed fee is fair for the value promised. That situation makes it even easier for lawyers to simply pull a number out of a hat. As I’ve written before, under any fee system, so long as lawyers are driven by a desire to maximize revenue, without regard to the client’s best interest, then clients will suffer:

Until lawyers start realizing that we owe special duties to our clients because of our fiduciary relationship, not to mention our ethical responsibility, there isn’t a billing practice in the world that will produce reasonable and fair fees – and let us sleep guilt free at night.

Didn’t need to go to law school or work with a law coach to comprehend that concept either.

  • RJON ROBINS

    Carolyn,

    Respectfully, I think you missed the point(s) of my commentary on the Stahlbush situation.

    People love to stand in judgment of others. Often without bothering to fully apprise themselves of all the relevant facts. One of the problems when people rush to judgment is that they miss the opportunity to learn from the situation.

    In this case, we can either assume the Ohio Supreme Court Justices are a bunch of nincompoops who suspended a lawyer who stole from her clients through an intentionally-fraudulent billing scheme – OR – we can all take-a-breath & admit that none of us have really taken the time to fully acquaint ourselves with all of the material facts and therefore have a little faith that if the learned Justices of the Ohio Supreme Court saw fit to suspend but not disbar Ms. Stahlbush, then isn't is MORE likely they found evidence that her over-billing was NOT intentional.

    I realize that it's easier and requires less self-examination to simply write-off Ms. Stahlbush as a crook who intentionally did something none of us would ever intentionally do. But that requires us to also write-off the Justices of the Ohio Supreme Court.

    ON THE OTHER HAND, it's not as easy and perhaps a bit more UNcomfortable for some lawyers to admit, that PERHAPS the Justices had their reasons for issuing suspension and not disbarment.

    Specifically, that Ms. Stalbush's transgressions were NOT intentional.

    But to arrive at that conclusion we must all face the fact that no-one taught any of us anything useful in law school or in any CLE courses for that matter either, about how to effectively track time in a busy law practice.

    And if that's the case, then maybe we're not quite as different from Ms. Stahlbush as we'd like to believe.

    If you ask them in private, almost every lawyer who bills by the hour will admit to having had to 'guess' to fill-in the gaps at the end of a busy day or week. Myself included. This is one of the reasons I am such a staunch proponent of value-based billing instead of simply selling hours.

    Most of the time we cheat ourselves instead of cheating our clients when we under-guess. But cheating on hours is still cheating on hours, regardless of who gets the short end of the stick.

    IN SUMMARY,. because I have to get back to my day now here are my points:

    1. Let's not be so quick in our rush to judgment that we miss the lesson.

    2. Let's acknowledge that we ALL have a gap in our education when we get out of law school and recognize that as responsible adults, having realized the problem it's each of our individual responsibility to solve it for ourselves. .

    3. Giving the Ohio Supreme Court the benefit of the double it would appear Ms. Stahlbush didn't recognize the problem or if she did, she failed to take personal responsibility to solve it. Incidentally, my comments were not meant as an indictment of law schools. They were meant as a call to action for all the lawyers who recognize the gap in our training

    Carolyn, your blog is a shining example of my last point. Thousands of lawyers have invested tens of thousands of hours on your blog. Why? Because we recognize that law school taught us how to do the job of a lawyer, not how to run the business of a law firm. Perhaps if Ms. Stahlbush had spent more time on My Shingle she would have recognized the problem & taken steps to solve it before her practice got so out of control.

    RJON

  • rjonrobins

    Respectfully, Ms. McGrane's comment exactly illustrates my point.

    If we presume that the Ohio Supreme Court is NOT made up of a bunch of idiots then we must conclude that they found evidence that Ms. Stahlbush did NOT do anything INTENTIONALLY wrong. Rather we must conclude that the Justices of the Ohio Supreme Court who actually SAW & HEARD all the evidence must have determined Ms. Stahlbush's transgressions were NOT-intentional. Otherwise they would have disbarred her instead of “only” suspending her license for one year.

    Dismissing Ms. Stahlbush as a “cheater” who should have heeded her lessons from elementary school makes for a clever sound bite. But sound bites rarely get at the heart of a problem.

    At the heart of this problem is the fact that more than 54% of Bar Grievances filed are law office management related and NOT intentional on the part of the lawyer(s) who make these avoidable and embarrassing mistakes.

  • http://twitter.com/BruceGodfrey Bruce Godfrey

    Mr. Robins I hold you and your law practice management resources in very high regard, but there are some practices so inherently outrageous that it is perhaps even more frightening to imagine them as gross errors rather than as acts of dishonesty.

    In my state we disbar lawyers for putting slugs in parking meters and the attorney in this situation ripped off the public for far more than 25 cents of parking time. How on earth does a non-dishonest person rack 25 hours billable in a 24 hour day? How does one reconcile this double-charging for the same time to the same ultimate payor? How can we as attorneys be entrusted by our courts to represent clients even facing death row, yet fail to be responsible for handling – as Ms. McGrane accurately noted – 4th grade definitions of the working clock and simple daily timesheet? I take no comfort in the failure of Ohio Bar Counsel to make the obvious case here for disbarment, unless Ohio discipline is simply rank with lassitude on frauds.

    If you work in a delicatessen and you double bill for the same pounds of pastrami, swiss, whatever, and the county inspector catches you manipulation of the scale, you get fired and your job maybe gets fined $1000.00; what you don't get is a sympathy crew from the deli workers' union about middle management's failure to warn you about not altering the scale. This is the difference between being a high school educated deli worker and an attorney under a sworn oath.

    Your point that law practice management is poorly taught in law school has general merit – great merit – but it exonerates this persistent fraudster not one bit. Had she done it for one day, or even a week, one might excuse it as sloppiness. But a year? Malice aforethought is proven in murder cases with far less evidence, and we occasionally execute people for murder.

  • rjonrobins

    Hi Bruce,

    Thanks for your comments. I always enjoy reading what you post on Twitter & hold you in high regard also.

    The thing to understand is that when a law firm's records management systems & procedures are out of control it's very hard for a lawyer to really understand where, when and how the revenues are coming-in, or going out.

    It's an over-simplification to say “well she saw her pre-bill was for 25 hours and sent it anyway”. That's not the way these kinds of problems develop in most law firms.

    Think about when you make a grocery list. OBVIOUSLY if you have it well-organized with eggs on the list twice, one just above the other, you're going to know not to buy too many eggs. As a fail-safe at some point you'd expect you're going to get to the second time you wrote eggs on the list and remember that you were just down that aisle a little while ago & see the eggs in the basket. And as a third fail-safe you're going to get to the cashier & when you see two crates of eggs you're going to know you made a mistake and put one of them back, right?

    But imagine going to the store without a list. Just a bunch of little post it notes crumpled in your pocket each with whatever was on your mind to buy at the moment you made the note. But never assembled into an actual list you can review. And then imagine having to shop but WITHOUT being able to look & see what's in your basket to remind yourself. And then similarly NOT being able to see the groceries as they get rung-up by the cashier. Until you get them home. And then, imagine just randomly stashing everything away without having assigned spaces or any sort of plan, so that A.) You have no way to know where to find what you need when you need it; and B.) You are unable to take a quick inventory the next time you're headed to the store to know what to buy.

    THAT'S EXACTLY HOW THOUSANDS OF LAWYERS MANAGE THE BILLING, A/R, PAYABLES, BUDGETING, & CASH FLOW OF THEIR LAW FIRMS.

    So when I read about a lawyer billing more than 25 hours for a single day I look at the two bottles of ketchup in my pantry and I think about all I learned in the financial management & controls courses we all took back in law school. All NONE of them.

    And that's a big part of my point. Presumably the Justices of the Ohio Supreme Court found evidence of an out-of-control lawyer and not a dishonest one. How else do we explain the one year suspension instead of outright disbarment?

    In direct response to your questions though, here are my answers:

    You wrote: “How can we as attorneys be entrusted by our courts to represent clients even facing death row, yet fail to be responsible for handling…4th grade definitions of the working clock and simple daily timesheet?”

    My answer: THIS IS EXACTLY WHY I'VE BEEN UP HERE ON MY SOAP BOX FOR THE LAST 10 YEARS. Because one skill set (effectively advocating a client's legal position) has NOTHING to do with the other skill-set, or lack-thereof: Book Keeping. This is why I've been offering my FREE IOLTA Client Property Trust Account Management Training Videos at http://www.LawyerControl.com

    You wrote: “This is the difference between being a high school educated deli worker and an attorney under a sworn oath.” Yes, there are many differences; But being inherently skilled to effectively manage the financials of either a law firm or a deli, isn't one of those the differences.

    Rhetorical Question: How does being an attorney under a sworn oath inherently prepare anyone to install, manage & maintain effective financial controls over a law firm?

    That's why the title to my free IOLTA client property trust account management includes the reference to “without feeling like a schmuck”. Because even though most lawyers deny it in public, in private that's exactly how thousands of lawyers actually feel when faced with the duty to protect client property, but not the skills to actually do so efficiently or effectively.

    You wrote: “…but it exonerates this persistent fraudster not one bit…”

    Perhaps I was too subtle in my previous posts including the original post at my blog to which Carolyn responded (http://rjonrobins.typepad.com – See post from August 28th).

    So here I will be blunt: ANY LAWYER WHO HAS NOT TAKEN A BOOK KEEPING COURSE AND DELEGATES THE ADMINISTRATION OF HIS OR HER CLIENT BILLING (AND IOLTA) TO SOMEONE ELSE IS LITTLE BETTER THAN MS. STAHLBUSH. BECAUSE IT IS UNETHICAL TO TAKE RESPONSIBILITY FOR SOMETHING YOU HAVE INADEQUATE TRAINING FOR. AND IT IS DOWNRIGHT STUPID TO DELEGATE SOMETHING AS IMPORTANT AS CLIENT PROPERTY AND BILLING TO SOMEONE-ELSE, WHEN YOU HAVE INADEQUATE TRAINING TO KNOW IF THEY'RE DOING THE JOB RIGHT.

    My point about Ms. Stahlbush was not to exonerate her one bit.

    My point is that there but for the grace of luck and guessing goes tens of thousands of lawyers who similarly have ZERO training in law firm management and financial controls.

    The State may not be executing them, but they're killing THEMSELVES the way they're trying to run their law firms.

    Especially when it could be so much more profitable & fun if they'd only learn to do it right.

    ~RJON

  • http://twitter.com/BruceGodfrey Bruce Godfrey

    There is a lot of merit in what you have written. Be well and my best wishes for your continued success!

  • isolde

    It's not okay to overbill. We get it. Here's what you're missing in your diatribe: desperation. Pure and simple desperation. The feeling a person gets when they can't make the mortgage payments or the student loan payments (which aren't dischargeable anyway) and the kids need new clothes and the car needs gas, etc. etc. My point – and I suspect Robins agrees, although maybe I'm putting words in his mouth – is that it is time for the profession as a whole to start taking responsibility for graduating a bunch of lawyers who could not realistically be absorbed by the market and who are now finding themselves trapped in a profession that doesn't want them. Should they be fraudulently billing clients? No. Is it the fault of law schools that a lot of never-associates are finding themselves strongly tempted to do it so they can pay the bills this month? Yes, I think it is.

  • Kevin Chan

    If you need to bill 10 hours a day, 365 days a year to put new clothes on your kids, you need to stop sending your kids to school in armani.

  • Kevin Chan

    'If we presume that the Ohio Supreme Court is NOT made up of a bunch of idiots then we must conclude that they found evidence that Ms. Stahlbush did NOT do anything INTENTIONALLY wrong.'

    This reminds me of the 'Fox news: Evil or stupid' bit on the Daily Show (http://vodpod.com/watch/4295785-the-daily-show-debates-is-fox-news-evil-or-stupid ). My understanding is that your argument goes: she's not too dishonest to practice law, she's just too stupid.

    And if you're arguing for some kind of alternative where 'I wasn't taught it in law school' is a valid excuse, that's BS. If an entrepreneur who starts a business without any formal education in business management wouldn't get a pass from the taxman, why on earth should a lawyer in this case? This is the worst kind of irresponsibility. Ask someone for advice, buy a book. Do you really need a court to tell you you have a responsibility to bill correctly?

    If you would rather risk transgression at your client's expense then ask for help, well it's time to pay your bill.

    And for what it's worth, I'm just starting to practice, I didn't learn anything about book keeping or billing in law school, and yet I somehow found the time to contact my bar association to enquire about how to go about it properly.

  • rjonrobins

    Kevin,

    Please go back & re-read my post. I've been up here on my soap box for the past 10 years, saying almost the EXACT SAME THING as you are saying above.

    In ADDITION (not instead of) I am also saying that lawyers who are rushing to make Ms. Stahlbush the butt of their jokes or center-point of their “outrage” over a dishonest lawyer getting her comeuppance, they are are missing the lesson.

    The lesson is that no, you don't need a court to tell you that you have a responsibility to bill correctly. And yet “somehow” there are still tens of thousands of lawyers running their own law firms who every month, still can't seem to do it.

    Of course their version of billing incorrectly is to short themselves and not their clients. But either way, billing incorrectly is still a sign of incompetence at this important aspect of managing a law firm.

    And yes, just because your law school completely neglected to teach you anything about how to effectively, ethically and profitably manage the financial controls of your law firm that DOES NOT give you a pass.

    Kevin, I quote from my above comment: IT IS UNETHICAL TO TAKE RESPONSIBILITY FOR SOMETHING YOU HAVE INADEQUATE TRAINING FOR. AND IT IS DOWNRIGHT STUPID TO DELEGATE SOMETHING AS IMPORTANT AS CLIENT PROPERTY AND BILLING TO SOMEONE-ELSE, WHEN YOU HAVE INADEQUATE TRAINING TO KNOW IF THEY'RE DOING THE JOB RIGHT.

    So you see, we really ARE making the same point. Though you get bonus credit for referencing The Daily Show in your argument.

    RJON

    p.s. You mentioned that you contacted your State Bar for instruction on how to effectively set-up, manage & reconcile your IOLTA client property trust account and billing system. You didn't mention what State you're in or if they gave you much more than a set of rules & regulations, or a comprehensive step-by-step lesson on the practical realities and real-world best practices of managing a law firm client property trust account as the PROFITABLE law firm management tool it was meant to be?

    If not you might want to check out http://www.LawyerControl.com for a free lesson in this important area of your business.

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  • http://www.sddglobal.com Legal Dodo

    Although the billable hour does not seem to be dead as yet, its days are definitely numbered. Clients are increasingly demanding reduced legal costs, forcing the law firms to innovate. One solution to the high legal fees problem is legal outsourcing.

    With the advent of legal process outsourcing, legal work is now being done at a fraction of the cost in countries like India, without compromising in quality. Legal outsourcing providers are helping buyers of legal services in the U.S. reduce costs dramatically by providing cost effective legal solutions.

  • Stephie Daniel

    Not only the over billing but client’s billing comes up like a very tough time over the billing and invoicing in any process. In practical not only the client’s billing but also lots many approaches are prone with various errors that comes into play.

    Practically the if we visualize then a client billing approach makes a lot of errors in the movement of any process. i came across one very beautiful post ( http://www.replicon.com/blog/you-cant-manage-what-you-cant-measure ) that makes good sense prevails for any official management system those are service based and applies to the over all management.

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