Billing Considerations for Overlapping Legal Services
Adopted: October 27, 2023
Opinion rules that a lawyer may provide services to multiple clients simultaneously and explores various billing structures for overlapping services.
Inquiry #1:
May a lawyer provide services to multiple clients at the same time, to wit: Lawyer appears at the same calendar call for four separate clients; or Lawyer provides legal services for Client B while traveling for Client A’s case?
Opinion #1:
Yes, provided Lawyer’s services for each client are not detrimentally impacted by Lawyer’s joint efforts and confidentiality is maintained as to each client matter. Modern clients expect a lawyer to be available, capable, and willing to provide services in a variety of scenarios and at a variety of times. Clients also expect a lawyer to make efficient use of time and resources in providing reasonably prompt and diligent representation in accordance with Rule 1.3. If Lawyer can maintain the same quality of services when providing overlapping or simultaneous services to multiple clients, and if Lawyer takes steps to preserve the confidentiality owed to each client when providing such services pursuant to Rule 1.6, Lawyer may provide services to multiple clients at the same time.
Inquiry #2:
Given the answer in Opinion #1, may Lawyer bill each client an allocated portion of the total time Lawyer actually spent performing overlapping services?
Opinion #2:
Yes, provided the client consents to the billing structure and the billing structure is accurate and honest, not clearly excessive, and any efficiencies created by the Lawyer’s provision of overlapping services are passed on to the client. See Opinions 3 through 10, below.
Inquiry #3:
Lawyer appears at calendar call on Monday morning. Lawyer spends one hour attending calendar call, during which Lawyer appears on behalf of four clients. Lawyer’s fee agreement with each client provides Lawyer may bill $200 for each hour of legal work completed, including court appearances.
May Lawyer, who bills on an hourly fee basis, bill a total amount of hours to multiple clients that exceeds the actual amount of time Lawyer collectively spent providing the overlapping services (e.g., Lawyer bills each of the four clients for one hour of legal work, for a total of four billed hours of work)?
Opinion #3:
No.
Rule 1.5(a) prohibits a lawyer from charging or collecting “clearly excessive” fees. Comment 6 to Rule 1.5 states that, “[a] lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures.” Furthermore, Rule 7.1 prohibits a lawyer from making a “false or misleading” statement about the lawyer’s services, and Rule 8.4(c) prohibits a lawyer from “engag[ing] in conduct involving dishonesty . . . or misrepresentation that reflects adversely on the lawyer’s fitness as a lawyer[.]”
In RPC 190, the Ethics Committee concluded that it was dishonest for a lawyer to bill one client for the completion of work product and subsequently bill a different client the same amount for the reused work product. “Implicit in an agreement with a client to bill at an hourly rate for hours expended on the client's behalf is the understanding that for each hour of work billed to the client, an hour's worth of work was actually performed. If a lawyer who has agreed to accept hourly compensation for her work subsequently bills the client for reused work product, the lawyer would be engaging in dishonest conduct in violation of Rule [8.4(c)].” RPC 190. In 2007 FEO 13, the Ethics Committee reiterated, “The fiduciary character of the client-lawyer relationship requires a lawyer to act in the client's best interests and to deal fairly with the client. When billing on an hourly basis, fair dealing requires that the lawyer provide an hour's worth of legal services for each hour billed.”
The American Bar Association reached a similar conclusion in 1993. In ABA Formal Opinion 93-379, entitled “Billing for Professional Fees, Disbursements and Other Expenses,” the ABA addressed various billing practices involving one lawyer completing work for multiple clients simultaneously, all of which were considered “unreasonable fee[s]” in violation of Model Rule 1.5:
A lawyer who spends four hours of time on behalf of three clients has not earned twelve billable hours. A lawyer who flies for six hours for one client, while working for five hours on behalf of another, has not earned eleven billable hours. A lawyer who is able to reuse old work product has not re-earned the hours previously billed and compensated when the work product was first generated. Rather than looking for profit from fortuity of coincidental scheduling, the desire to get work done rather than watch a movie, or the luck of being asked the identical question twice, the lawyer who has agreed to bill solely on the basis of time spent is obliged to pass the benefits of these economies on to the client.
ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 93-379 (1993). Multiple state ethics opinions agree with the ABA’s conclusions. See, e.g., Oregon Formal Op. 2005-170 (2005) (“A lawyer who bills more than one client for the same time expended on the same service has billed more time than the lawyer actually worked. The lawyer-client relationship is ‘one of special trust and confidence’ and ‘must be characterized by fairness, honesty and good faith.’”) (citing In re Howard, 304 Or. 193 (1987)); Alaska Formal Op. 96-4 (1996) (“For example, a lawyer spends three hours traveling to attend a deposition in Seattle. If the lawyer decides to spend the time on the airplane drafting a motion for a different client, he or she may not charge both clients, each of whom agreed to hourly billing, for the time during which he was traveling on behalf of one client, but drafting a document on behalf of another. The lawyer has not earned six billable hours.... [W]here the client has agreed to pay the lawyer on an hourly basis, the economies associated with a lawyer’s efficient use of time must benefit the client rather than giving the lawyer an opportunity to charge a client for phantom hours.”)
North Carolina joins in the chorus agreeing with the ABA’s and other jurisdictions’ conclusions on this issue. Lawyer has an obligation to respect and strengthen the trust and confidence that his clients place in Lawyer by carrying out the representation in their best interests, including Lawyer’s billing practices. To this end, Lawyer must prioritize his clients’ interests above his own by passing any benefits created by Lawyer’s efficient provision of legal services on to the clients. Unquestionably, Lawyer may complete work for multiple clients at the same time (provided Lawyer’s legal services for each client are not detrimentally impacted by Lawyer’s joint efforts); but Lawyer’s billing structure must be accurate, honest, not misleading, and not clearly excessive in accordance with Lawyer’s professional responsibilities. Accordingly, Lawyer may not bill a total of four hours for one hour of actual work because doing so would be clearly excessive, dishonest, and misleading in violation of Rules 1.5(a), 7.1, and 8.4(c).
Inquiry #4:
Same scenario as Inquiry #3. May Lawyer bill each client one quarter of an hour, for a total of one hour billed?
Opinion #4:
Yes, provided the client consents to the billing structure and the billing structure is accurate and honest, not clearly excessive, and any efficiencies created by the Lawyer’s provision of overlapping services are passed on to the client. When Lawyer completes work for multiple clients simultaneously, Lawyer may prorate his fee by allocating an equal portion of the total time spent providing legal services to each of the clients served. Alternatively, and when measurable, Lawyer may prorate his fee for each client based upon the proportion of work attributed to the client over the hour of actual work completed. See Opinion #2.
Inquiry #5:
Same scenario as Inquiry #3. May Lawyer charge each client a flat fee for each court appearance made on the client’s behalf?
Opinion #5:
Yes, provided the flat fee charged is not clearly excessive and the client consents to the fee charged. Rule 1.5(a). A flat fee is a fee paid “for specified legal services on a discrete legal task or isolated transaction[.]” 2008 FEO 10. The flat fee “pays for all legal services regardless of the amount of time the lawyer expends on the matter[.]” Id. If Lawyer has clearly communicated to the client this proposed flat fee billing structure and the client has consented to the flat fee charge for each court appearance made by Lawyer on the client’s behalf, and provided the flat fee charged is not clearly excessive, Lawyer may charge each client the agreed upon flat fee upon completing the discrete task of appearing in court for the client.
Inquiry #6:
Lawyer is flying to Seattle from Raleigh for a deposition in Client A’s case. Lawyer’s fee agreement with Client A provides that Lawyer may charge Client A $150 per hour for time spent traveling for purposes of the representation. During the flight, Lawyer worked for three hours on a brief in Client B’s case. Lawyer’s fee agreement with Client B provides that Lawyer may charge Client B $300 for every hour of legal work completed in Client B’s case. May Lawyer bill Client A for four hours of travel time to Seattle and Client B for three hours of legal work completed during the flight to Seattle, for a total of seven hours billed time?
Opinion #6:
No. See Opinion #3. In this scenario, Lawyer has spent four hours traveling for Client A, during which he completed three hours of work for Client B. Lawyer did not complete seven hours of work in four hours of actual time; to claim otherwise would be inaccurate. Accordingly, billing seven hours of work that occurred during the span of four actual hours would be false or misleading in violation of Rule 7.1 and dishonest in violation of Rule 8.4(c). Additionally, billing one client a full hourly rate for time spent traveling while simultaneously billing another client a full hourly rate for legal services rendered is clearly excessive in violation of Rule 1.5(a). Lawyers are permitted to bill clients for time spent traveling because travel requirements deprive the lawyer of the ability to work for clients or otherwise be productive in a law practice. A lawyer sacrifices the time that could be spent providing legal services to another client when traveling, and thus the lawyer has the option to bill for time spent traveling as a means to be compensated for lost work time. However, a lawyer who is able to work while traveling negates the justification for full hourly compensation based upon travel for a client. Accordingly, billing a full hourly travel rate for time spent traveling while simultaneously working for and billing a different client a full hourly rate for legal services is clearly excessive.
Without question, Lawyer may complete work for Client B while traveling for Client A. See Opinion #1. Nothing in this opinion should be construed to indicate that Lawyer cannot or should not provide—and bill—legal services to one client while traveling for a different client so long as Lawyer’s services to both clients are not detrimentally impacted by the simultaneously provided services and Lawyer’s billing practice for such a scenario is accurate, honest, not misleading, and not clearly excessive. See Opinion #3.
Inquiry #7:
Same scenario as Inquiry #6. May Lawyer prorate his hourly rates for each client, to wit: charge 50% of Lawyer’s travel hourly rate to Client A and 50% of Lawyer’s hourly rate for legal services provided to Client B during the time Lawyer’s services to each client overlapped?
Opinion #7:
Yes, provided the client consents to the billing structure and the billing structure is accurate and honest, not clearly excessive, and any efficiencies created by the Lawyer’s provision of overlapping services are passed on to the client. See Opinion #4. Alternatively, Lawyer could bill Client B Lawyer’s full hourly rate for the time spent providing legal services, then deduct that amount of time spent on Client B’s matter from Client A’s travel time (in this scenario, Client B would be charged three hours for legal services provided, and Client A would be charged one hour of travel time).
Inquiry #8:
Same scenario as Inquiry #6. May Lawyer bill Client A a set fee that is not based upon an hourly rate (e.g., a flat fee for travel services or a per diem) while billing Client B the full hourly rate for legal services provided?
Opinion #8:
Yes, provided the fees charged are not clearly excessive and the clients consent to the fees charged. Rule 1.5(a). See Opinion #5.
Inquiry #9:
Same scenario as Inquiry #6. If Lawyer charges Client A a set fee or prorated fee for travel as described above, is Lawyer prohibited from also billing Client A for travel expenses incurred (e.g., mileage for driving, airplane ticket, lodging)?
Opinion #9:
No, provided the expenses charged are related to the representation, are not clearly excessive, and the client is aware of and consents to the expenses for which he will be responsible. Rules 1.5(a) and (b).
Inquiry #10:
Lawyer bills clients in six minute “units,” charging a client one-tenth of his hourly rate for each unit of work. Lawyer clearly sets out his unit billing practices in all of his fee agreements and obtains the client’s agreement to the billing practice prior to providing legal services.
Lawyer spends three minutes responding to an email from Client A; as a result, Lawyer charges Client A one billing unit. Lawyer immediately thereafter spends three minutes responding to an email from Client B, charging Client B one billing unit. Although Lawyer has completed only six minutes of work, Lawyer charged two separate billing units representing 12 minutes of work. Considering the opinions above, does Lawyer’s unit billing to Clients A and B violate the Rules of Professional Conduct?
Opinion #10:
No, provided the client consents to the billing structure and the billing structure is accurate, honest, and not clearly excessive. Rules 1.5(a), 7.1, and 8.4(c). The legal services Lawyer provides to Clients A and B do not overlap; rather, Lawyer provided distinct and separate services to each client. Because Lawyer has clearly communicated the basis of his unit billing practice to each client in writing and obtained each client’s consent to the billing structure, and because Lawyer’s unit billing practice is not clearly excessive, Lawyer is entitled to bill each client the relevant “units” of time for the separate services rendered. Notably, while hourly billing is a form of unit billing, billing in one-hour units would be clearly excessive. Rule 1.5.
Inquiry #11:
Are there additional billing structures that are not covered by this opinion that would be permissible under the Rules of Professional Conduct?
Opinion #11:
Yes. As discussed above, the hourly billing structure is the most problematic billing structure when providing overlapping or simultaneous services because billing full hourly rates to multiple clients while providing such services produces clearly excessive, inaccurate, and misleading or dishonest fees. See Opinions #3 and 6. This opinion identifies alternative, permissible billing structures that a lawyer may incorporate into his practice when providing simultaneous or overlapping services, but the alternatives identified herein are not exhaustive. Billing structures may vary depending on the client or the nature of the representation. Provided the billing structure is accurate, honest, not misleading, and not clearly excessive, and provided the client is sufficiently informed about and consents to the billing structure, a lawyer should exercise his professional judgment when creating and incorporating a billing structure into the representation of a client. Additionally, although the Rules of Professional Conduct recognize that not all fee agreements must be reduced to writing, the Ethics Committee strongly encourages lawyers to reduce all fee agreements and the billing structures therein to writing when practicable to ensure clarity for all parties involved.