Authored By: Jennifer Cupples and Jennifer Grieco
Block billing is a common time-keeping practice in which attorneys use a single billing entry for total daily time spent on multiple tasks. In various unpublished opinions, the Michigan Court of Appeals has previously rejected arguments that the use of block billing is per se vague or improper – so long as the entries within the blocks are adequately detailed. In Lakeside Retreats LLC v Camp No Counselors LLC and Adam Tichauer, the Michigan Court of Appeals has now provided to-be-published authority in a per curiam opinion on the reasonableness of block billing for purposes of determining attorney-fee awards. If block billings are sufficiently detailed to permit an analysis of which tasks were performed, the relevance of those tasks, and whether the amount of time expended was reasonable, there is not anything intrinsically unreasonable to preclude an award of such fees.
In Lakeside Retreats, a default was entered against the defendants on plaintiff’s claim for breach of contract, which established defendants’ liability for payment of the plaintiff’s reasonable attorney fees pursuant to contractual fee-shifting provision. Following a hearing, the trial court determined a reasonable hourly rate of $275, and deducted certain fees incurred for clerical work by staff. The trial court then ordered that plaintiff was entitled to $41,153.77 in reasonable attorney fees and costs from defendants, jointly and severally. It did so over defendants’ counsel’s objection to counsel’s use of “block billing” in their invoices.
On appeal, the Michigan Court of Appeals affirmed. It rejected defendants’ reliance on Augustine v Allstate Ins. Co., 292 Mich App 408; 807 NW2d 77 (2011) to challenge the practice of block billing as per se unreasonable. It reasoned, nowhere in Augustine did the Court condemn block billing. Rather it condemned counsel’s total failure to make contemporaneous time entries or document time spent on tasks related to litigation as exemplified by counsel’s submission of a summary billing statement that was a “retrospective exercise based on memory and possibly some office notes or excel spreadsheets.” The invoices at issue in Lakeside Retreats did not suffer such deficiencies. While block billed, plaintiff’s attorney’s invoices were broken down by month, by the attorney or staff member who worked on the file, and with enumeration of specific tasks undertaken on specific days. The Court determined that entries such as “follow up with client re: Status of filing and service,” “review draft Response re: Motion and assist re: edits,” “review correspondence from Atty Broughton,” “draft Proof of Service,” were not vague and itemizing these entries would not make them more understandable. Because the block billing by plaintiff’s counsel was adequately detailed, the trial court’s fee award after conducting “a very detailed assessment as to whether” the services described in the invoices “were necessary and whether the amount of time spent on those were reasonable,” was not an abuse of discretion.
In reaching its holding, the Michigan Court of Appeals noted the absence of published Michigan authority concerning the per se unreasonableness of block billing. The Court found persuasive more than a half-dozen of its prior unpublished opinions which had “consistently rejected the proposition that the use of block billing is per se improper or vague so long as the entries within the blocks are themselves adequately detailed.” Furthermore, the Court reasoned that the federal courts did not outright “reduce attorneys’ submitted billable hours based directly on their use of block billing, but rather because the specific block bills presented contained vague entries,” which “make it impossible for the Court to evaluate the reasonableness of the hours expended in the litigation.” See Gatz v Bollinger, 353 F Supp 2d 929, 939 (ED Mich, 2005). In some cases, rather than rejecting a block bill entirely, the federal courts will impose a percentage reduction for the use of “sloppy and imprecise time records.” See Jane L v Bangerter, 61 F 3d 1505, 1510 (CA 10, 1995).
The takeaway: there is now binding Michigan precedent that the use of block billing is not per se fatal to a claim for reasonable attorney fees. The sufficiency of detail will guide the determination of whether the legal services described in invoices were necessary and the amount of time spent on those tasks reasonable as laid out in Lakeside Reteats. Still, for federal court matters, practitioners should be mindful of the potential percentage reduction for vague block billing entries.