Attorney Reprimanded For Billing Corporate Client For His Sanctions

Posted on May 20th, 2015 by Legal Fee Advisors

The Iowa Supreme Court has reprimanded an Illinois attorney resulting from his multiple billings of a client for sanctions stemming from his misconduct in connection with his representation of Deere & Co.[1] According to the Iowa Supreme Court Disciplinary Board, the attorney failed to communicate to the client regarding the nature of a discovery dispute, and then proceeded to bill his client for sanctions that resulted from his own lack of diligence and communication, in violation of the Rules of Professional Conduct.[2]

The Board found that the billing of the client for the sanctions was troubling because the attorney failed to plainly inform the client that the sanctions resulted from his own misconduct.[3] Though noting that the attorney did make a partial disclosure with respect to the first sanction, totaling $700.00, by labeling the amount as “Miscellaneous; Penalty on Discovery; Doug Stephens Law Firm,” the court pointed out that he failed to disclose his responsibility for the penalty. Further, the second and third sanctions of $1,750.00 and $1,050.00, labelled “Misc[ellaneous] Costs” and “Miscellaneous; Attorneys’ Fees; B. Douglas Stephens,” respectively, the client was not informed of the nature of these payments. In fact, only after the attorney’s former law partners learned of the sanctions orders was the client fully informed.[4]

Charging clients for costs that should be borne by the firm is not uncommon—it has become a routine practice for law firms to bill clients for things that should be considered firm overhead, such as local travel expenses and late-night meals. However, billing clients for sanctions caused by an attorney’s own incompetence is likely the kind of egregious action that reinforces a perception that law firms engage in the corrupt practice of inflating legal bills by passing unjustified costs to the client. Furthermore, the fact that this was disclosed to the client after the attorney’s law partners found out highlights a few important issues regarding legal billing.

This case illustrates the importance of detailed billing entries. Even though a client should not be billed for the attorney’s sanctions, the client may have been able to catch the problem had the entries been detailed enough to sufficiently allow the client to know for what it was being charged.  Further, failure of an attorney to be transparent has serious consequences. Though the attorney in this instance was only reprimanded, such violations of the Rules of Professional Conduct may also lead to attorney disbarment.

J. Clark

[1] Debra Weiss, Lawyer who billed corporate client for his sanctions is reprimanded, ABA Journal, (Sept. 2, 2014), http://www.abajournal.com/news/article/lawyer_who_billed_corporate_client_for_his_sanctions_is_reprimanded_partly.

[2] Iowa Supreme Court Attorney Disciplinary Board v. Davidson, No. 14-0878

[3] Id.

[4] Id.