The United States has seventy percent of the world’s lawyers but only five percent of the world’s population. U.S. industry spends billions of dollars annually on litigation costs and efforts to avoid liability. The US has thirty times more lawsuits than Japan, one of America’s primary trade competitors. Product innovation in America is drastically curtailed due to overwhelming liability concerns. My industry of healthcare delivery has costs that are spiraling out of sight, leaving many Americans underinsured or uninsured. The cost of virtually every good and service has an increased cost, reflecting the cost of rampant litigation in this country.
Folks, we do not require healthcare reform, we required immediate legal reform in the United States. If you want to see the US become competitive in the Global market, we must institute immediate legal reform. US business is burdened with billions in unnecessary legal regulation and frivolous law suits. If you desire to see your healthcare premiums decline dramatically, allow us to practice medicine and rid ourselves of the constant threat of litigation.
Remember Jin Nam Chung and Ki Chung in their dry cleaning business, Custom Cleaners, in Washington in 2007? The Chung’s were sued for $65 million over a lost pair of pants belonging to a contentious local judge. How can one pair of pants possibly cost $65M? The answer is our out of control legal system in the US.
How did we get in this mess?
The majority of our elected officials are attorneys. We are to blame for electing attorney to govern this nation. We have now elected an attorney as President. In the 109th Congress, 218 Members (160 Representatives, 58 Senators) list their occupation as law. My native state of Wyoming has only one attorney elected to Congress. One of our US Senators is an orthopedic surgeon. The Wyoming Legislature is comprised of thirteen percent attorneys. The same is sadly the composition of most state legislative bodies in the US.
According to the Wyoming Board of Medicine, Wyoming has 988 practicing physicians. Mr. Dover Sleeter of the Wyoming State Bar states that Wyoming has 1,885 active, practicing attorneys with a population of 500,000.
US law schools produce more graduates than medical, dental and veterinary schools combined. The Judicial Branch now makes law instead of interpreting the law such as a Judge in California that recently ruled that all home schoolteachers had to be certified educators in order to teach their kids at home. How did our Founding Fathers learn? By certified teachers?
Attorneys are experts at nothing. They are not experts at business, finance, healthcare, mining, engineering, or education. Attorneys are not even experts on the law. For example, we hire a prestigious law firm in Denver that markets themselves as experts in healthcare. We pay the firm, after a large retainer, $500 per hour to complete legal research on Stark Laws that we deal with on a daily basis. After tens of thousands of fees for phone calls, postage, and paralegal, the firm tells us what we already know.
Attorneys provide no benefit to society other than redistribution of wealth. Ponder this for a moment. You and your spouse desire to divorce. What does the legal profession immediately tell you to do? Hire an attorney! What value is an attorney in a divorce? The couple has $100,000 in assets to be divided 50/50. However, not with the legal profession. Of the $100,000 you hire an over compensated attorney and you waste $25,000 so you have $75,000 to divide. Who wins? The attorney wins every time and they have done nothing but taken $25,000 that could have been divided among the two of you. In addition, God for Bid if there are children involved in the divorce. Attorneys will file motion after motion to keep the cash register ringing while you pick up the tab. All the money wasted on attorney fees could have benefited the kid’s college fund instead of your attorney’s college fund.
Fraudulent Billing
How do we address the millions in fraudulent billing by law firms each year? Research indicates that fraudulent billing costs the consumer millions of dollars each year. Why do we not have audits of law practices on billable hours? Why are law firms not accountable? Because our legislative bodies are comprised of attorneys that do not want their profession exposed.
There are many anecdotal accounts of billing abuses by lawyers. Perhaps the most well-known recent case is that of Webster Hubbell, a former chair of the Arkansas Bar's ethics committee and a partner at Little Rock's prestigious Rose Law Firm, who went from number three in the Clinton Justice Department to prison. Hubbell was convicted of stealing $394,000 from his clients and his own law firm by billing for time he never worked.
Another flagrant example of gross billing abuse involved a prominent Chicago lawyer in a large and prestigious firm who averaged 5,941 billable hours per year over four years. That equates to an average of sixteen hours and twenty minutes per day, every day, 365 days a year. The lawyer claimed to have never taken a day off in four years.
A small firm Kansas attorney reportedly charged the State Workers' Compensation Fund an average of 33 hours a day for one ten-day period. An auditing expert uncovered a Southern California lawyer who had billed a single client for 50-hour workdays and a New Orleans firm that routinely billed four hours for letters a single sentence long.
Lawyers are rarely punished for billing abuses. Raleigh, North Carolina bankruptcy attorney Mark Kirby charged in federal court on 16 counts of billing fraud. Among other offenses, he billed 90 hours in one day. Between June 1990 and July 1991, Kirby billed a total of 13,000 hours, even though that 13-month period, calculated at 24 hours a day seven days a week, was only 9,500 hours long. Yet Kirby's trial resulted in a hung jury. His defense: everybody does it.
Indeed, the justification that "everybody does it" is widely used in the legal community. "The problem is not so much the behavior of one lawyer" says Professor Bogus, "as it is the conduct of the firm." If attorneys believe that they can ethically "multi-task," by billing two, three or more clients for the same hour, or bill for the "value" of their services, even when that value vastly exceeds the time the work actually takes, lawyers like Kirby will continue to be the inevitable consequence.
Law firms bill us $100 per hour for paralegals that make $10 per hour. How do we know, because their jobs are listed in the paper advertising $10 per hour. In addition, we are billed for phone calls and postage. What other profession bills for phone calls and postage to communicate with their customers? Law firms have no accounts receivable because all of your legal work is paid in advance with the massive retainer requirements. We would love to operate our healthcare business on a cash basis and have customers pay the postage to send them a bill!
In 1991, Cumberland (Ala.) law professor William Ross surveyed 280 lawyers in private practice and 80 who worked in-house for companies. Not a large sample size for serious research.
Seven out of eight practicing lawyers said that it was ethical to bill a client for "recycled" work originally done for another client. Half said they had billed two different clients for work performed during the same time period, such as dictating a memo for one client while traveling for another. Just as shocking were what lawyers concluded about their colleagues' billing practices: 55% said that lawyers occasionally or frequently "pad" their hours; 64% said they were personally aware of lawyers who had padded their bills. The in-house lawyers surveyed were even more clear: over 80% felt that the billable hour influenced how much time the outside lawyers they hired spent on a case, and 74% felt that the billable hour significantly decreased lawyers' incentives to work efficiently.
Detection is difficult because lawyers turn a blind eye toward their colleagues' dishonesty. Catholic University law professor Lisa Lerman talked to many lawyers uncomfortable with partners who cheated, "but they go along with it because they see it as professional suicide to do anything about it." And the bigger the firm, the deeper the abuses can be buried.
Stop the Bleeding
So how do we stop the bleeding? First, do NOT elect any attorney to public office. That includes city council, county commissioner, school board, state legislature and Congress. We eliminate attorneys and replace them with actual experts in industries such as education, engineering, healthcare, and finance. We change the composition of our elected offices to business professionals instead of attorneys.
Secondly, do not reelect any judicial appointment. Judicial appointments were not created to be career institutions. The judicial system needs to change every election so we do not have career policymaking judges.
How do we address the fraudulent billable hours by attorneys? We institute aCPT(Current Procedural Terminology) and audit program for law practices. We institute yearly audits of law firms’ billable hours performed by non-legal folks. The audit firms are incentivized to discover fraudulent billing by instituting financial incentives based on the fraud they discover. The law firms pay the audit fees just as we do with our outside accounting auditors in a real business.
The vast change is the implementation of CPT codes much like the healthcare industry and auto industry. For example, when you take your vehicle in for repair, the auto industry has a shop manual that instructs them how many hours they can charge to complete a procedure. The same is true for the healthcare industry. We eliminate fraudulent billing in the legal profession because they can only bill for a certain CPT code and not pad their billable hours.
Let’s say you and your spouse desire to have a simple will drafted by an attorney. The simple will has a CPT code associated with it and the attorney can only bill you for that amount of time. The CPT code makes money for the efficient attorney because they can complete the work in less time than the CPT code allows. The inefficient attorney will loose money and either become efficient or seek another profession. The consumer has won!
We demand accountability in every profession except the US legal profession. It is time we are competitive in the US by eliminating the constant threat of legal action. We institute an immediate audit and CPT code system, which will eliminate fraudulent billing and make attorneys accountable. We change the make up of our legislative bodies to include business experts in healthcare, education, transportation and manufacturing. The US consumer wins and we create thousands of jobs for the US economy.
Professor Domman is a healthcare expert, Wyoming native, award-winning speaker and author. He is Founder of Frontier Group, Inc. headquartered in Phoenix, Arizona USA. Professor Domman may be reached at mailto:brion@intermntiom.com" brion@intermntiom.com .
