Friday, May 8, 2009

Are firms overbilling for online research?

Assume a firm has an account with an online research service like Westlaw or Lexis according to which the firm pays a flat fee for using the service. Then assume the firm conducts certain research for a client and charges the client hourly fees to perform the research. Is that firm overbilling the client?

Some people are arguing that some firms are "using Westlaw and Lexis as profit centers" and, as the National Law is reporting today, at least one lawsuit has been filed claiming unjust enrichment against a firm that billed a client $20,000 for online legal research that cost the law firm only $5,000.

I have not seen the complaint in this case, so I don't really know what the allegation is, but I am guessing the issue here depends on what it is the firm is billing the client for. If the firm is billing the client for the value of the lawyer's time in doing the research, the firm should be free to charge the hourly fee. If, on the other hand, the firm is charging the client for "expenses" then the firm should only charge the client the actual value the firm is spending on the expenses.

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