Careers

Diversity, Equity & Inclusion

Experience

Innovation

Interactive Maps

Locations

About

Pages

Meet our team of innovators
Ask us how we do it

Professionals

Insights

Services

Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

Home | Thompson Hine LLP

Atlanta

Chicago

Cincinnati

Cleveland

Columbus

Dayton

Los Angeles

Minneapolis

New York

Silicon Valley

Washington, D.C.

<img style="max-width: 100%;height: auto;max-width: 100%;height: auto" loading="lazy" class="alignright size-medium wp-image-3996" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2018/07/Money-bag-2-300x200.jpg" alt="" width="300" height="200">As the legal market continues to change, attorneys face more challenges when it comes to client relations. While the trend has been for clients to&nbsp;<a href="https://www.floridabar.org/news/tfb-journal/?durl=/divcom%2fjn%2fjnjournal01%2ensf%2fc0d731e03de9828d852574580042ae7a%2f554c2b2514be522985256adb005d6261%21OpenDocument%26Highlight%3d0%2c%2a">slash attorney&rsquo;s fees</a> by hiring third party auditors to review bills, or to aggressively seek discounts on fees, ethical considerations, and now the United States Court of Appeals for the 10th Circuit,&nbsp;make it clear that overbilling clients cannot be a solution for legal revenue woes.
In a recent <a href="http://filehost.thompsonhine.com/uploads/16-1464-2018-05-22_e7ed.pdf">opinion</a>, the Tenth Circuit left a law firm with a legal bill of its own when the Court ruled that the firm&rsquo;s malpractice insurer was entitled to recover its expenses from defending an overbilling malpractice claim not covered under the firm&rsquo;s policy.
What happened?
In 2012, the Colorado Attorney General&rsquo;s Office began investigating attorney Michael P. Medved for allegedly overbilling clients, and later filed suit against him.&nbsp; Additionally, Medved was facing a class action suit from former clients relating to the same allegations. Medved reached out to his firm&rsquo;s malpractice insurance provider, Evanston Insurance Company, for representation in both matters.&nbsp; At the time, Medved&rsquo;s firm had a malpractice policy that covered &ldquo;wrongful acts by reason of professional services.&rdquo; Evanston agreed to defend Medved subject to a reservation of rights. Both cases resulted in relatively quick settlements.
Evanston later sued Medved seeking reimbursement for legal fees and costs incurred, arguing that the malpractice policy did not cover claims related to overbilling because overbilling was not a &ldquo;wrongful act by reason of professional services.&rdquo;
The 10th Circuit Court of Appeals agreed, reasoning that:&nbsp; &ldquo;The alleged wrongful act (overbilling) lacked the required connection to professional services rather than the claim itself, and the &lsquo;by reason of&rsquo; phrase does not create a connection between the wrongful act and the professional services . . .&rdquo;
Medved argued that Evanston&rsquo;s failure to properly reserve its right to challenge the representation should estop Evanston&rsquo;s claims, but the Court of Appeals quickly dismissed this argument, finding that Medved had failed to show prejudice.
Ethical considerations
<a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees.html">Model Rule 1.5</a> prohibits a lawyer from collecting unreasonable fees or an unreasonable amount of expenses from a client. While this rule seems pretty simple on its face, there is no bright-line test to determine what is, or is not, reasonable. Given there is no bright-line rule, the ABA Model Rules provide eight factors you should consider when determining the reasonableness of a fee.
<a href="https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/mrpc_1_5.authcheckdam.pdf">All jurisdictions</a> have adopted some version of Rule 1.5.&nbsp; Clients and courts have been paying more attention to attorneys&rsquo; billing practices; the Tenth Circuit&rsquo;s ruling here points to the risk of not being able to rely on malpractice insurance to cover the cost of defending against overbilling claims.
The Tenth Circuit ruling also shines a light on the importance of heading off billing problems with clients before they start.&nbsp; Communicating with clients about fees is more important than ever, and it&rsquo;s also part of your duty under your jurisdiction&rsquo;s version of <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_4_communications.html">Model Rule 1.4</a> (Communication). Thoughtful communication with the client throughout the course of a matter is the best practice.&nbsp; However, the more transparently you communicate with clients about your fees and billing practices on the front end, the less likely it is that you&rsquo;ll have to defend against an action based on overbilling on the back end.
*<a href="http://www.linkedin.com/in/imokhaiokolo">Imokhai Okolo</a> is a rising second-year law student at the University of Akron School of Law where he serves as an Assistant Editor on the Akron Law Review, member of the Akron Law Trial team, Vice President of the Akron Black Law Students Association, and Student Director of the Driver License Restoration Clinic.

core/freeform

Ethics

Legal Ethics, Professional Responsibility and the Business of Law

Measure twice cut once: 10th Circuit decides malpractice policy doesn’t cover overbilling claims