Alleged Hourly Billing Fraud against Wilmer Law Firm: This Is What Happens When Legal Budgets Are Not Reviewed and Approved Ahead of Time by the Client
Patrick is commenting on an article at law.com noting McAfee Sues WilmerHale for over $12 Million in Legal Fees.
It is hard to imagine any client entering into a legal services agreement with a law firm without first identifying the budget. Obviously, litigation is more challenging to budget. However, it certainly appears that the Wilmer law firm and McAfee failed to discuss expectations going in. A law firm can always, consistent with the ethical duties of protecting the client’s interest, scale up or down its activities consistent with the budget expectation from the client. Hourly billing is ripe with possibility of overbilling allegations since it is a system built around simply “paying whatever it costs” after the work is done and after the bill arrives.
90% of the work that we do at Traverse Legal is on a flat fee basis. We set forth defined deliverables and a flat fee cost for the client to review and approve. As noted in the previous post, our retainer agreement is simply an email exchange between us and the potential client. There is very little room for problems because the client’s expectations and fee are approved before the project even begins.
The above allegations of attorney fraud and hourly overbilling are yet another example illustrating why hourly billing is bad for both law firms and clients.