Why Settlement is the Best Way to Resolve Overbilling Complaints

"Overbilling" is one of the most common complaints against lawyers, and among the easiest to settle.

After all, fees are negotiable, so discounting them is an option from the beginning. The hard part is settling after the firm has done the work. In any case, settlement is often the best way to resolve fee disputes. That's what one BigLaw firm learned when hit with a complaint for a "billing feeding frenzy."

'Billing Feeding Frenzy'

Right about now, Morrison & Foerster wishes it had never happened. The "billing feeding frenzy" case has made more headlines about the firm than a hundred other cases combined -- at least in the last three months. It started in February when the media picked up the story: "MoFo faces Overbilling Lawsuit Alleging a 'Billing Feeding Frenzy." In the complaint, the plaintiffs alleged the law firm expended "an exhorbitant and excessive amount of time" on the case. Thirty-four different firm employees billed "669 hours at a cost of $484,321.39." (That's an average of $723.94 an hour, for anyone with a calculator.)

It got worse. The complaint alleged the firm liquidated claims "at a major discount," so that some of the funds could be sent to the law firm's trust account and applied to its bills. But the biggest complaint, in dollars, was that MoFo missed $17 million in claims the plaintiffs could have asserted. That's a lot of billable hours in anybody's book. Anyway, three months later the parties settled on confidential terms. The law firm never admitted liability, and the plaintiffs apparently are happy with the result. Their attorneys released a statement that "Morrison & Foerster provided plaintiffs with valuable legal work, and plaintiffs appreciate its counsel."

The Moral of the Story

There is no real moral to this story of fee disputes and overbilling complaints. It's more about the value of settlement. The cost of settlement is not always in the dollars. The value comes from not litigating, not dragging out a process that even lawyers don't like. Add some practical and ethical considerations, and it makes all the sense in the world to settle fee disputes as soon as possible.

By the way, "failure to return calls" is the most common complaint against lawyers. And a lot of those clients are probably calling to complain about the fees.

Related Resources:

• MoFo Settles Texas Suit Over Billing Practices (Texas Lawyer)
• When Lawyers Need a Lawyer: Wills and Succession (FindLaw's Strategist)
• Law Allows Attorneys to Store Guns for Clients. Should You? (FindLaw's Strategist)