Formal Advisory Opinion No. 01-1
Ethics & Discipline / Advisory Opinions / Formal Advisory Opinions / Formal Advisory Opinion No. 01-1
STATE BAR OF GEORGIA
ISSUED BY THE SUPREME COURT OF GEORGIA ON MAY 3, 2001
FORMAL ADVISORY OPINION NO. 01-1
Is it ethically permissible for an attorney, with or without notice to a client, to charge for a standard time unit without regard to how much time is actually expended?
A lawyer may charge for standard time units so long as this does not result in a fee that is unreasonable, and so long as the lawyer communicates to the client the method of billing the lawyer is using so that the client can understand the basis for the fee.
Given the proper resources, equipment and effort, time can be measured with infinitesimal precision. As a practical matter, however, clients routinely require only sufficient precision in attorney billings to determine reasonableness and fairness, and this would not normally necessitate a level of precision in recording the time expended by an attorney that would require hair-splitting accuracy. It is the practice of many attorneys to bill on a time-expended basis, and to bill for time expended by rounding to standard units of from 6 to 15 minutes. This gives rise to the possibility that a lawyer could spend one minute on a client matter, and bill the client for 15 minutes. While "rounding up" is permissible, see, e.g., ABA Formal Opinion 93-379 (December 6, 1993), repeatedly rounding up from one minute to fifteen minutes is questionable at best and would raise substantial issues as to whether the fee was reasonable under Rule 1.5(a), Georgia Rules of Professional Conduct. See also Rule 1.5(a) ABA Model Rules of Professional Conduct. A lawyer could avoid a challenge to rounded up fees as excessive by using a smaller minimum unit (a six minute unit is preferable), and only rounding up if more than half that time was actually expended. See Ross, The Honest Hour: The Ethics of Time-Based Billing by Attorneys (Carolina Academic Press: 1996), p. 169.
It must be noted that even this practice, billing in six minute units but only billing a unit if more than three minutes was expended, results in the attorney billing for time not actually expended on the client matter. Rule 1.5(b), Georgia Rules of Professional Conduct, provides:
When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
In order to comply with Rule 1.5(b), the lawyer must take care to clarify to the client the basis for the billing. To simply inform a client that the lawyer would bill on a time expended basis, without explaining any standard unit billing practice, would not be a clear communication of the basis for the fee.
In addition, we note that Rule 7.1(a)(1), Georgia Rules of Professional Conduct, governs "Communications Concerning a Lawyer's Services", and provides:
[A] communication is false, fraudulent, deceptive or misleading it if:
(1) ...omits a fact necessary to make the statement considered as a whole not materially misleading.
Comment 1 to Rule 7.1 provides that Rule 7.1 to applies to "all communications about a lawyer's services...."
To simply inform a client that the lawyer would bill on a time expended basis, without explaining any standard unit billing practice, would omit a fact necessary to make the statement as a whole not materially misleading, and would violate Rule 7.1 (a).
To insure a clear understanding between the attorney and the client, the attorney should provide the client with an explanation in writing of the basis for the fee. Rule 1.5(b), Georgia Rules of Professional Conduct. See also Rule 1.5(b) ABA Model Rules of Professional Conduct. In order to comply with Rule 1.5(b), the attorney must communicate the basis for the fee to the client, and in order to comply with Rule 7.1(a), the communication must include an explanation of any standard unit billing practice.
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