Best Billing Practices to Minimize Fee Disputes
By David A. Gauntlett*
Introduction
You did everything right. You gave prompt notice of a claim and secured a defense from your insurer. No need to worry about the expensive legal bills anymore, right? Not so fast. Even if an insurer acknowledges its duty to defend (either willingly or following a declaratory judgment action), the carrier will carefully review every legal invoice line by line and search for expenses that are either uncovered or (in the carrier’s opinion) unreasonable. In my decades of practice, I have been through this song and dance too many times to count. In this blog, my goal is to pass along some of the lessons learned for best billing practices that reduce pushback from insurers looking to contest charges. These same lessons are equally applicable in other contexts where attorneys’ invoice might be reviewed, such as when fees are awarded to the prevailing party.
Billing Practices to Avoid
Describing your work in ways that would not motivate your intended audience to pay.
Using language that suggests “routine” or non-specialized work is being done.
Language that insurers are known to complain about (“telephone calls,” “research,” “conferences”).
Any entry that suggests you are involved in a “billing exercise” instead of valuable work for the client.
Describing what you are physically doing instead of the job you are working on; it does not matter if a conference is conducted in person or on the telephone or on the Internet; it does not matter if you use a computer or a pencil; it does not matter if you are walking or sitting down; it does not matter if you are reading, reviewing, researching, thinking, organizing, or writing.
Describing work that sounds secretarial or paralegal in nature (for example, lawyers should “draft” while secretaries “prepare” documents).
Describing work in terms of conferences with other lawyers in your office (insurers seem to have a belief that whenever lawyers are talking to one another it is a waste of time).
Using too much of the default language associated with a task code.
Referencing people that you are working with.
Billing Practices to Embrace
Emphasize effort. Effort is the single most important thing clients (including insurers) want from lawyers. Your billing entries should make it clear to any layperson reader (who may not understand exactly what lawyers do on a minute-to-minute level) that progress is being made.
Connect tasks to a product. Describe how your work is related to a deliverable product for the client (a motion, declaration, opposition, letter) or preparation for a court appearance, meeting, etc. (e.g., “Legal research for the purpose of [drafting motion to dismiss] re (a) [description of the research project and specific sources researched]; (b) [specific source researched].) Don’t stop at describing your work. Whenever possible, explain how that work advances progress on a product the client can hold in their hands.
The deliverable is the final product that is being drafted. The description of the deliverable may be, for example, “for the purpose of drafting portion of [final product] regarding [specific argument addressed].”
Keep time entries brief. To the extent possible, work entries should be broken into segments less than an hour and less than half an hour whenever you can. This means breaking up into multiple billing entries work on a large project whenever possible, but avoid repetitive wording that changes only a few words for the broken-up project.
Longer descriptions. Whenever reasonable, time entries should read like a good table of contents. They should include enough detail to for a reader to easily understand the work to which they are connected.
Make the client want to pay. Highlight important and complex work. Explain in detail the analysis you are performing and how it combines the rationale of several governing cases to undermine a specific argument advanced by the opposing party in its most recent motion. Visceral descriptions that convince the client that the work was necessary will make them rush to pay. Or at least not grumble quite as much.
Pharmaceutical Patent Lawsuits Benefit from the Same Practices
The “American rule” is that a party generally must pay its own attorneys’ fees, regardless of which party prevails in a lawsuit. There are, however, several exceptions. For example, a party can recover attorneys’ fees in a patent lawsuit if it can show that the suit was “exceptional.”[1] Courts have interpreted the statute as imposing a totality-of-the-circumstances test to determine whether the losing party “litigated in bad faith.”[2]
Even after proving that bad faith litigation, a prevailing party is not necessarily owed full reimbursement of all attorneys’ fees.
On appeal [in Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1552 (Fed. Cir. 1989)], the Federal Circuit held that the award of all of the plaintiff's attorney fees was improper, since only that “portion of its attorney fees which related to the vexatious litigation strategy and other misconduct,” should have been awarded.[3]
That said, courts acknowledge that legal work cannot always be neatly partitioned when claims involve a common core of facts or are based on related legal theories:
“Much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete claims. Instead, the district court should focus on the overall relief obtained . . . in relation to the hours reasonably expended on the litigation.”[4]
Nonetheless, careful billing can aid in limiting the reductions a court is likely to impose. The most egregious practice to avoid is “block billing.”[5] Courts routinely impose blanket reductions of approximately 20% if invoices include block billing.[6] Gilead Scis., Inc. v. Merck & Co. illustrates two additional grounds that may be raised for challenging attorneys’ fees: “ [1] Merck requests a reduction of 4,946 hours (19.7%) based on excessive hours and duplication of efforts. . . . [2] Merck argues that the high ratio of senior to junior attorneys warrants an additional 5.6% reduction of the remaining hours.”[7]
All of these issues can be avoided or at least mitigated by adhering to the practices described above. Opposing counsel cannot claim “block billing” if proper detail is provided. Nor can they reasonably assert duplication of efforts if each entry is detailed enough to distinguish itself from prior entries, even when similar work is performed on the same product. Finally, senior attorneys properly emphasizing the complexity of work they perform will serve to explain why that work could not have been performed by a junior attorney.
Conclusion
While far from the most glamorous part of an attorney’s work, billing entries are not to be dismissed as unimportant. Proper care and craftsmanship in this task can help avoid complications. Sloppiness can mean the “end” of a lawsuit is just the beginning of an entirely new dispute over money rivaling the original amount in controversy.[8]
*David A. Gauntlett is a principal of Gauntlett & Associates and represents policyholders in insurance coverage disputes regarding intellectual property, antitrust, and business tort claims, as well as in the underlying actions. He also provides expert witness testimony on a variety of issues such as policy interpretation, bad faith, and fee disputes. Mr. Gauntlett can be reached at (949) 553-1010 by voicemail or dag@gauntlettlaw.com. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com.
[1] 35 U.S.C.A. § 28 (“The court in exceptional cases may award reasonable attorney fees to the prevailing party.”)
[2] Microstrategy Inc. v. Crystal Decisions, Inc., 586 F. Supp. 2d 256, 259 (D. Del. 2008).
[3] Id. Parties ordered to pay attorneys’ fees, especially insurers, might also contest the rates charged by attorneys rather than the necessity of work performed. See David A. Gauntlett, Battling for Equity-Securing Appropriate Fee Rates in C. C. §2860 Disputes, https://www.gauntlettlaw.com/news/battling-for-equity-securing-appropriate-fee-rates-in-c-c-2860-disputes (Mar. 31, 2022).
[4] Id. at 260 (quoting Beckman Instruments Inc. v. LKB Produkter AB, No. R-85-3133, 1990 WL 10072480, at *9 (D. Md. Aug. 9, 1990), aff'd, 930 F.2d 37 (Fed. Cir. 1991)).
[5] Momenta Pharms., Inc. v. Amphastar Pharms., Inc., No. CV 11-11681-NMG, 2016 WL 2642997, at *7 (D. Mass. May 9, 2016) (“The term ‘block billing’ refers to the time-keeping method of ‘itemiz[ing] several tasks within a single time entry rather than maintaining separate time entries for each task performed’.”) (quoting RFF Fam. P'ship, LP v. Link Dev., LLC, 962 F. Supp. 2d 340, 343 (D. Mass. 2013), order clarified, No. CIV. 11-10968-NMG, 2013 WL 3990776 (D. Mass. Aug. 2, 2013)).
[6] Momenta Pharms., Inc., 2016 WL 2642997 at *8 (collecting cases and imposing a 20% reduction in the case at hand).
[7] Gilead Scis., Inc. v. Merck & Co., No. 13-CV-04057-BLF, 2017 WL 3007071, at *3 (N.D. Cal. July 14, 2017).
[8] Mark L. Levine & Alan Littmann, Mark Levine Writes Article on Managing Litigation Costs, https://www.bartlit-beck.com/newsroom-news-118#:~:text=According%20to%20the%20American%20Intellectual,the%20total%20amount%20at%20stake. (noting that patent litigation suits with less than $1,000,000 at risk have a median cost of $600,000).