A recent law suit contends that a law firm’s online research client charge-backs are unlawful. This hints at the bigger issue is what should be overhead and what should be a charged to clients.
Carolyn Elefant writes in Law Firm Markup of Research Costs: Annoying or Unlawful? at Legal Blog Watch about a plaintiff who “claims that that Chadbourne [wrongfully] charged him $20,000 for computerized legal research services that actually cost the firm only $5,000.” She cites an NLJ article and links to and discusses several blog posts commenting on the article.
I think this suit and her post raise two questions:
(1) What should law firms bill back to clients and
(2) If a service is billed back, how should the rate be set.
My answer to the first: firms charge for whatever they can easily meter. Legal technology – online research, fax, phone, copiers – all come with built-in metering. Books, the library itself, space to store client documents, and circulating periodicals do not. Paralegal work is easily metered; secretarial work is not. (Firms may have missed charging for secretarial time working on documents, which the DMS can meter.)
The second question is harder to answer because it turns on how one interprets the Canons of Ethics. In the past, clients voiced discontent about fax and copying as profit centers though I don’t know if that ever translated into a lawsuit.
Three interpretations of this situation come to mind. Law firms
(1) work hard to allocate costs fairly to clients
(2) are randomly managed and lack a coherent vision of their core business, or
(3) are opportunistic and mercenary.
Am I missing potential explanations?