May 162012
 

State and municipal budget problems have been well documented over the last few years.  The last thing counties need are inflated legal bills. But that’s exactly what happened to Luzerne County, Pennsylvania.  According to the Times Leader, Luzerne County spent $334,000 on legal costs for parents in Children and Youth cases last year, more than twice their $125,000 budget.

A Times Leader investigation revealed that the high bills were at least in part due to improper attorney billing practices, including one lawyer who doubled billed the county for travel time. After being approached by a reporter, the offending attorney admitted her mistake, alerted the county, and hired a forensic accountant to audit her records. The audit revealed that the county had been overcharged by $59,042, largely due to the burden of a heavy case load and errors in the way bills were processed.

In response, the county is changing their payment structure.  Under the old scheme, attorneys chosen from a pool were paid $55 per hour, with no limit on the amount of hours worked.  Under the new structure, the county will hire three attorneys for the remainder of the year under a flat fee agreement.

The flat fee is supposed to avoid billing controversies such as double billing for travel, since attorneys will be paid one fee, regardless of the amount of work that goes into cases (or billing entries).  However, fixed fee arrangements aren’t always efficient,  and they are unlikely to help with heavy case loads, as it is arguable that an attorney with a flat fee agreement in place has less incentive to spend the time necessary for the reasonable defense of each case. As with so many things, there is often a tradeoff between depth of representation and cost. In such situations, the deciding factor is priorities. As assistant county solicitor Brian Bufalino put it, when you have a fixed cost, there won’t be any concerns over cost overruns.  That may be true, but the better solution might be to control costs through the institution of reasonable but strict billing guidelines, with periodic bill auditing. A flat fee structure [if not carefully constructed] can so restrict legal work in a litigation that the county may actually have to pay more in judgments and settlements.