Generally, paralegals who are firm employees do not set their billing rates. Business matters relating to fees are left to the firm's administrators or attorneys. Many paralegals are, however, responsible for keeping track of their time. This article will provide a short background on the recovery of fees, a brief discussion of decisions affecting paralegal fees, and some helpful tips for preparing bills for the client.
The judicial exception is based on equitable principles such as (a) a common fund where a substantial benefit is conferred upon members of an ascertainable class, e.g., class actions, or (b) bad faith based on vexatious, wanton or oppressive actions by one party, e.g., sanctions through Federal Rule 11 or pursuant to local court rules.
The statutory exception arises when a specific statute provides for fees to the prevailing party, e.g., the Illinois Consumer Fraud and Deceptive Business Practices Act. The contractual exception occurs when a contract between parties provides for attorney fees if the contract must be enforced.
Ten years ago the U.S. Supreme Court handed down the watershed case regarding paralegal fees, Missouri v. Jenkins, 491 U.S. 274, 109 S.Ct. 2463, 105 L.Ed. 2d 229 (1989), holding that paralegal work should be compensable at market rates under Section 1988 of the Civil Rights Act. Since that decision, however, for a variety of reasons there have been inconsistent rulings on whether paralegal time is recoverable. Part of the problem lies in counsel's failure to present a proper fee petition containing all the necessary elements.
The burden is on the petitioner to present sufficient evidence from which a court can render a decision as to its reasonableness. The fee petition must itemize the date the work was performed, the identity of the person doing the work, detail of the task performed, and the time spent. The amount charged must reflect reasonable community standards.
It is also helpful to present the court with information on the credentials of each billing professional, including attorneys, law clerks and paralegals. This can easily be done by attaching a copy of each person's curriculum vitae (or resume) showing the person's education, training and work experience.
In determining whether fees should be awarded, the court then considers several factors, such as the skill and standing of the legal professionals, the nature of the case, the novelty and difficulty of the issues involved, the degree of responsibility required, the usual and customary charge for the same or similar services in the community, and whether there is a reasonable connection between the fee charged and the case itself. [See Harris Trust & Svgs. Bank v. American Nat'l Bank & Trust Co. of Chicago, 230 Ill.App.3d 591, 595 (1st Dist. 1992).]
A lack of this data may result in denial of fees. For instance, in McGreevy v. Oregon Mutual Insurance Co., 951 P.2d 798 (C.A. Wash. 1998), paralegal fees were denied where the only information provided was the number of hours worked and the hourly rate. The court said it needed to consider the paralegal's qualifications and a description of the work performed. In Walker v. U.S. Dept. of HUD, 99 F.3d 761 (5th Cir. 1996), a paralegal's time was entirely disallowed because all activity for a day was lumped together without adequate description.
A fee petition, particularly one seeking large sums of money, will be closely scrutinized by the court and opposing counsel. The other side will complain of over-staffing, excessive hours billed for the task, excessive rates, vague detail of work performed, unnecessary work, and failure to delegate to lower-billing staff.
In fact, courts have denied attorney fees because the work should have been done by paralegals. In two Illinois cases, fees were reduced because the court said the paralegal, not the attorney, should have performed the deposition summaries and assembled documents. [See Lockrey v. Leavitt Tube Employees Profit Sharing Plan, 1991 LEXIS 17175 (N.D. Ill. E.D.); Kitamura Machinery of USA v. Cimteq, Inc., 1993 LEXIS 3330 (N.D. Ill., E.D.)]
My favorite quotation on this subject is from Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3rd Cir. 1983): "Michelangelo should not charge Sistine Chapel rates for painting a farmer's barn."
Market rate for paralegals can be determined quite easily. NFPA issues its Paralegal Compensation and Benefits Report in alternate years, revealing salaries and billing rates across the country by region and metropolitan areas. Local associations may also publish surveys of their members. The Illinois Paralegal Association conducts an annual salary survey showing the relationship between salary and experience and billing rates in various geographic areas. This survey is prepared by an independent company and has been cited in recent court cases. Check your local paralegal association to see if it conducts similar surveys.
When you receive an assignment, ask the attorney the name of the client and the nature of the billing matter. Is your time to be billed by tenth hour (.1) or by quarter hour (.25)? Or is the case a contingent fee case? Is there a timekeeping requirement at all?
Make contemporaneous time entries. As soon as the work is done, record details of the task. If you wait, you'll forget. Be sure to submit your hours in a timely manner so that you meet billing deadlines.
Billing is an art, and your choice of words can affect whether the client is willing to pay the fee. Poorly worded entries reflect on your level of professionalism, so try to use persuasive language. For example:
| DON'T: | ||
| mm/dd/yyyy | Talked to Wally;
went to bank |
2.0 hours |
| DO: | ||
| mm/dd/yyyy | Interoffice conference with attorney Smith of real estate department
re documents required for closing. Attended meeting at First National Bank with attorney Smith for document execution and closing |
2.0 hours |
Obviously, the client will be more willing to pay the second bill because it can readily see what you did and because the task appears worthy of the amount charged.
Do not be vague in your entries. This only raises a client's concern for double billing. List what you are achieving during the task. Describe the nature and reason for each phone conference.
Avoid repeating the same phrase. Several entries for "telephone conferences re: status" or several "review file" entries will only make the client wonder why you didn't get it right the first time. List what specific issue was discussed or what specific documents were reviewed.
Your bill tells the client the story of how you handled the case from the beginning to the end. It describes the steps you took to reach the end result. It also can serve as a record of what you did in case there are questions later (also known as "CYA").
Your supervising attorney or billing partner does not have time to add sufficient detail to your entries and, if the description is insufficient, may end up deleting the time altogether. This will not look good at an end-of-year performance review, particularly if the firm keeps records of your billable time. It is better to enter too much information than not enough. The attorney can't create time the paralegal does not enter, but can delete entries made or mark them "no charge."
It is important to keep track of costs incurred or advanced, such as photocopies, filing fees, messenger service or court reporter invoices. Many firms require using a client code number to operate their photocopiers, fax machines, and telephones. These client code numbers are automatically entered into the computerized billing software each evening.
Alternately, a firm may issue disbursement forms to be filled out by the attorneys or paralegals. Sufficient detail is important to notify accounting of the name of the client and the detail of the charges. These forms may also be used for reimbursement of out-of-pocket expenses.
NFPA has adopted a Model Code of Ethics and Professional Responsibility. Ethical Consideration 1.2(c) requires paralegals to "ensure that all timekeeping and billing records prepared by the paralegal are thorough, accurate, honest and complete." Paralegals must not knowingly engage in fraudulent billing practices, such as inflation of hours billed, misrepresentation of tasks performed, or submission of fraudulent reimbursement requests. [EC 1.2(d)]
Answers to your questions about everyday situations can be found in the NFPA Informal Ethics Opinions located on the website www.paralegals.org, ABA formal opinions, various ethics books published especially for paralegals, and local codes of ethics. For example, Illinois has published its own Code of Paralegal Ethics, and Rule 10 specifically addresses billing and fees.
Cathy Heath, RP, is president of Paralegal Network, Inc., in Geneva, IL, which since 1988 has offered freelance paralegal services to attorneys, specializing in litigation. A veteran of three terms on the board of directors of the Illinois Paralegal Association, she is currently chair of its fee recovery and freelance sections and its primary to NFPA.