Minimum Billing Increments and Rounding of Hours

An article entitled “No Time for a Round-Up” which appeared in the latest issue of ABA Journal eReport caught my attention. The article discussed the recent public censure of Kansas lawyer Larry L. Myers, who admitted he regularly rounded three-fourths of an hour of work up to a full hour for billing purposes.

Myers faced a hearing with the Kansas Board for Discipline of Attorneys in July 2005. Although his billing habits had nothing to do with the hearing, one panelist on the board noticed all of Myers’ billing in the matter before them was in whole hours except for one entry of 3.5 hours.

Several legal ethics experts — William G. Ross, a professor at Samford University’s Cumberland School of Law and author of The Honest Hour: The Ethics of Time-Based Billing by Attorneys; Lisa Lerman, who teaches professional responsibility at the Catholic University of America Columbus School of Law; and Stephen Gillers, the New York University School of Law ethicist — uniformly opined in the article that billing in minimum increments, and rounding up, are both outdated and unethical practices.

The article cited the ABA Commission on Ethics and Professional Responsibility 1993 Formal Opinion 93-379 as that which touches closest to the issue of rounding of hours. But it points out that the opinion raises as many issues as it resolves, as is unfortunately often the case. The bottom line voiced by the ethicists is that 1) regardless of whether your engagement agreement stipulates minimum billing increments, it is not ethical and may well not stand up under scrutiny, and 2) a minimum billing increment of a quarter hour is definitely excessive under any circumstances.

In PA it has been a long-standing practice at many firms to set timekeeping guidelines which will stipulate minimum increments of time to be charged up for certain activities. For example, a firm may have a policy of charging not less than .2 for each telephone call. That is meant to take into account the time spent preparing for the call, often spent in telephone tag, and the time after the call memorializing what was discussed. However, Ross points out that in recent years, courts around the country have disapproved of quarter-hour billing increments because they are so large as to lend themselves to abuse. A federal court in Kansas, a year after that state’s supreme court first ruled as a matter of law that rounding up is wrong, restated that point in disallowing 10.5 minutes in every one of 169 phone calls for which a law firm billed as having taken 15 minutes.

I think this article focuses a spotlight on a common timekeeping/billing practice at many PA firms. If yours is one of them, you should take another look at your practices and make sure you can justify them fully if called into question.

I am not an ethics expert by any means. But fortunately for you the PA Bar Association and Philadelphia Bar Association have ethics experts on staff and you can call or write for guidance. The PBA also publishes a comprehensive Pennsylvania Ethics Handbook which is well worth the price. It covers just about all of the every-day situations and questions which arise.

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