Big Law’s Internal Audit of Associate Billing Reveals Padded Bills Associated with Document Review
July 01, 2021
We have heard it many times before – document review in today’s e-ubiquitous world is expensive. But imagine a client’s surprise when it learns an already expensive litigation task was plagued by associate over-billing.
According to a recent complaint filed with the Illinois Attorney Registration and Disciplinary Commission (“IADRC”) (see In the Matter of Stephanie Alexandra Gerstetter), an associate litigation attorney at Reed Smith, LLP, Stephanie Gerstetter (“Gerstetter”), was assisting a more senior associate with two separate document review projects. Specifically, Gerstetter was tasked with using the software program Relativity to analyze and code for production digitally stored documents. Unbeknownst to Gerstetter, Relativity was tracking and logging the time she spent reviewing documents.
In June 2020, Reed Smith performed an internal inquiry into Gerstetter’s billing practices, and learned Gerstetter billed materially more time to the two document review projects than Relativity indicated she invested in conducting the review. Specifically, the complaint alleges that for a document review in August 2019, Gerstetter billed 29.2 hours despite logging only 23.5 hours in Relativity; and for a second project in March 2020 Gerstetter “recorded billing entries on 49 separate days totaling 197.7 hours of purported time that she claimed to have spent reviewing and coding documents” but “only worked 33 separate days totaling 113.1 hours.”* As a result of Gerstetter’s overbilling, Reed Smith billed its client for approximately $42,000 of legal services Gerstetter never performed.*
While the need for accurate time keeping cannot be overstated, this case is an interesting reminder of that obligation. Moreover, in a world where attorney compensation and success are often judged by productivity and the billable hour, it is critically important that firms, too, comply with their responsibility to monitor attorney billing practices to avoid ethical pitfalls and malpractice issues, obligations attendant to time keeping and billing entries.
*The complaint asserts one claim against Gerstetter for “Creation of False Billing Entries, Charging and Collecting Unreasonable Fees” and cites violations of Rules 1.5(a) (Fees) and 8.4(c) (Misconduct) of the Illinois Rules of Professional Conduct.
**Reed Smith offered a refund or a credit to its client.
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