How may a lawyer bill a client for time a paralegal or non-admitted law clerk spends on the matter?

Plain-English summary

The Committee addressed how a lawyer should bill time devoted to a matter by a paralegal or a non-admitted law clerk, noting the 1969 Code contained no directly controlling provision. It drew on Kentucky Bar Association v. Graves, in which the court censured a lawyer who, after agreeing to a Board-fixed and contingent fee, required the client to fund an escrow account against which he charged "secretarial" and "law clerk" expenses; the court treated those as a disguised fee and observed that it would be improper to bill clients for what amounts to the lawyer's overhead, especially absent a specific agreement on those items.

The Committee also cited ABA Informal Opinion 1333 (1975) (such charges are properly part of firm overhead, but if separately stated the client should be made aware of the legal limitations on the personnel involved) and Los Angeles County Opinion 391 (1981) (a lawyer may bill for a law clerk's or paralegal's professional services if separately itemized). From these authorities it concluded that a lawyer who has agreed to a statutory, lump-sum, or contingent fee should not pass on additional charges for law-clerk or paralegal services absent an agreement; that where otherwise agreed, or where the lawyer charges an hourly rate, such charges may be separately stated; that a lawyer may instead absorb them as overhead not billed to the client; and that in no event should paralegal or law-clerk services be billed as attorney time, because that would represent that an attorney rendered the services, contrary to DR 2-106(A) and DR 2-107(A).

Currency note

This opinion was issued in 1985 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer add separate charges for paralegal time to a contingent or statutory fee?

A: Under this opinion, not without an agreement. The Committee concluded that on a statutory, lump-sum, or contingent fee the lawyer should not pass on additional law-clerk or paralegal charges absent an agreement.

Q: When may paralegal or law-clerk time be separately itemized?

A: The opinion said it may be separately stated where the client has agreed or where the lawyer charges an hourly rate; alternatively the lawyer may absorb the cost as overhead.

Q: Can paralegal time be billed at the lawyer's rate?

A: No. The opinion concluded paralegal or law-clerk services should never be billed as attorney time, because that would represent that an attorney performed the work.

Background and rules framework

The opinion applied the former Code's fee provisions, DR 2-106(A) (reasonable fees) and DR 2-107(A) (division of fees), against the disguised-fee holding in Graves. The modern analogs are Model Rule 1.5 (fees) and Model Rule 5.3 (responsibilities regarding nonlawyer assistance). The analysis turned on transparency to the client and on not misrepresenting nonlawyer time as lawyer time.

Citations and references

Rules of Professional Conduct:

• DR 2-106(A); DR 2-107(A) (former Code)
• MR 1.5 (fees); MR 5.3 (nonlawyer assistants)

Cases:

• Kentucky Bar Association v. Graves, 556 S.W.2d 890 (Ky. 1977), disguised-fee charges for clerk and secretarial time

Other opinions cited:

• ABA Informal Op. 1333 (1975); Los Angeles County Op. 391 (1981)

See also

• KBA Ethics Op. E-341: Delegating Work to a Non-Admitted Assistant
• KBA Ethics Op. E-336: Suspended Lawyer Serving as a Paralegal

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-303.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-303
Issued: May 1985

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

What is the proper method of billing the time devoted to a legal matter by a paralegal, or a non-admitted law clerk?

Answer:

See discussion.

References:

KBA v. Graves, 556 S.W.2d 890 (Ky. 1977); ABA I.O. 13333 (1975); L.A. County OP. 391 (1981); DRs 2-106 (A), 2-107(A) OPINION

The Code of Professional Responsibility (1969) does not contain any directly controlling provision concerning the inquiry. In Kentucky Bar Association v. Graves, 556 S.W.2d 890 (Ky. 1977), it was held that it was improper for a lawyer who had agreed to represent a workmen's compensation claimant for a fee fixed by the Board and prosecute other claims on a contingent fee basis, to require the client to establish an escrow account against which the lawyer would make charges for "secretarial" and "law clerk expenses. In that case, the Kentucky Bar Association took the position that such charges constituted a "disguised fee". In affirming the attorneys censure, the court observed, inter alia:
...billing to the escrow account expenses of law clerks, secretarial assistance
... especially in the absence of a specific agreement with respect to those particular items is improper. ... It is difficult for this court to comprehend an attorney with a full-time practice to expect his clients to meet his overhead expenses. ... It is doubtful if any member of the public who needed a lawyer would employ one who was to charge a standard fee for his legal services and then charge the costs of his secretaries and law clerks as expenses of litigation. Id. at 892. ABA Informal Opinion 1333 (1975) addressed the billing of services for law clerks:

We conclude that it is proper to include the charges in question as a portion of firm overhead. On the other hand, if the charges are separately stated (a practice which the ABA Committee approved), care should be taken to insure that the client is acquainted with the legal limitations upon the personnel involved. Also on point is Los Angeles County Opinion 391 (1981), which holds: A lawyer may bill a client for the professional services of a law clerk or legal assistant (paralegal), provided that such services are separately itemized in a billing. In light of the above authorities we conclude that an attorney who has agreed to represent a client for a statutory or a lump sum or contingent fee should not pass on additional charges for law clerk or paralegal services, in the absence of an agreement. If agreed otherwise, or in instances in which the lawyer charges an hourly rate, charges for law clerk or paralegal services may be separately stated. Of course, a lawyer may absorb such charges as overhead, which is not billed to the client. In no event should the services of a law clerk or paralegal be billed as attorney time, since this would amount to a representation that such services were rendered by an attorney. D 2-106(A) and 2-107(A).
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Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.