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Auditing Litigators May 6, 2006

Posted by federalist in Open Questions.
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How can you be sure your lawyer isn’t ripping you off?

Unless you’re a lawyer yourself, you probably have no way of knowing whether (A) the bills you receive are reasonable or (B) your lawyer is pursuing a strategy that is entirely in your interests — i.e., minimizing your costs while maximizing your probability of winning a judgment that will stick.

This same problem does arise in other professions that bill by the hour.  However it is more worrisome when that professional is a litigator — a person whose stock in trade is justifying arbitrary positions against explicit rules.  It would be fatuous for us to presume that litigators don’t exercise that skill in their own interests, which are nearly opposite those of their clients.  I.e., it is in a litigator’s interest to drag out litigation as long as possible, and also to overbill as much as possible along the way.  (And who’s to say what an efficient litigation strategy is, or what a fair bill might be, right?)  Granted, the bar requires all sorts of ethics training, but when your profession is squaring specific interests against specific rules that’s a small consolation.

What we seem to have here is a tremendous moral hazard.  So is there a mechanism whereby an unskilled client can audit his litigator, to ensure that he is being served fairly and competently? E.g.,

1. Can he contact the judge hearing the case directly to ask for his opinion as to whether his counsel appears to be acting in his best interests?

2. Can he pay a second lawyer to review the actions and bills of his litigator?  Would this be cost-effective?

3.  Since the bar associations have been taken over by trial lawyers and largely abdicated their duty to enforce ethics, might there be a niche for a lawyer certification organization? This could be a member-financed organization that would subject its members to random audits and also provide complaint adjudication. In exchange, members could advertise their membership, and clients looking for honest litigators could take that as a sign of increased security.

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1. federalist - May 6, 2007

Lest you think this concern is unfounded, the WSJ Law Blog highlights a survey by William Ross who discovers that bill padding is rampant in the legal profession.

2. federalist - September 25, 2007

Lester Brickman has an illuminating essay today, “Contingency-Fee Con-Men.” It seems that trial lawyers have made a habit of abusing their agency to extort excessive fees from defendants at the expense of their clients. Here’s the intro:

Suppose you believe you’ve been injured by the wrongful action of some individual or corporation and deserve compensation. You approach an attorney. She takes your case on a contingency fee.

Later on your attorney says she’s received a settlement offer of $150,000. You’re disappointed: You had hoped for more, and you’ll only get two-thirds of this lower amount. Then she tells you that she’s negotiated an entirely separate agreement for her fee with the defendant’s insurance company, which, she says, will not be subtracted from the settlement. “It’s all been taken care of,” she says. “There’s nothing for you to worry about.”

Clearly, you do have something to worry about: Was the settlement the best the attorney could get for you — or for her?

If the attorney’s behavior troubles you, it should. It is unethical — yet it is happening with increasing frequency.

3. federalist - March 9, 2009

The hourly billing custom may be cracking. Previous coverage here, and counterpoint here.


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