A Connecticut solo Timothy Spayne recently paid the federal government $1.24 million to settle charges that he overbilled the Electric Boat corporation for representing the company’s employees in workers compensation claims as reported in Billing for 94 Hour Day Nets Solo $1 Million Fraud Charge, Keith Griffin, Connecticut Law Journal (2/7/05).   According to the article,  Spayne’s infractions included billing for a 94 hour day (where he supposedly reviewed 113 files, received 91 phone calls and wrote 72 letters), billed between 13 and 24 hours for a day’s work 226 times and billed all time at his own rate though several non-attorneys worked in his office and presumably handled some of the work.  In addition, Spayne allegedly also opened separate files for each of multiple injuries incurred by workers rather than one file per work to increase his billings level.

On its face, Spayne’s case represents the tale of a greedy attorney (yes, a greedy solo, to be precise!) who took advantage of the workers comp system with what was presumably minimal oversight over billing statements and got caught.  But the case also teaches attorneys the importance of keeping detailed billing records – and raises the question of the appropriate level of compensation for repetive, routine work such as filling out workers comp claims.

First, to the lesson of the case.   It seems that Spayne’s fraud may have initially started out as “lump” billing, whereby attorneys lump together many small tasks into a daily period rather than accounting for it precisely when it happened.  For instance, many of Spayne’s 24 hour days may have been 24 hour periods that took place over the course of a week where he lumped the hours together.  Obviously, the lumping system went ridiculously out of control with an alleged 94 hour day but my guess is that’s how it started.

Laywers can determine in advance with clients how they will bill.  Perhaps clients will agree to “lump” billing; most, however, will prefer detail itemizations of the date the work was performed.  But while “lump” billing may seem easy in that it doesn’t require the same precision with records, it can make you careless – and then cavalier.  Pretty soon, you might find yourself in Spayne’s position.  Better to take the time and document hours as they occur.

Same with time spent by staff.  Don’t try to pass off work by staff as your own.  Bills for work performed by staff should be itemized separately and billed at a lower rate than the head attorney unless otherwise justified.

The other issue, here of course, is what’s the appropriate way to bill for repetitive tasks like workers’ comp claims.   By the time you handle your 10th or 11th form, most of the legal issues have been mastered and it’s just a matter of filling in the facts which might only take an hour.  Still, is it reasonable for a client to pay for just an hour of your time and not your expertise which enabled you to prepare the form so quickly to begin with?  For some attorneys, the solution is higher hourly rates for others, it’s a flat fee which rewards attorneys for efficiencies.  Personally, I’m not sure what the most equitable solution would be so as to fairly compensate the attorney and ensure that the client’s fee is reasonable.  But until the bar can come up with a solution to address the matter of repetitive work and develop some guidelines, we will continue to perpetuate an environment where it’s too easy for attorneys (whether unintentionally or by design) to charge more than what’s reasonable.