Perhaps known as much for his chiseled physique, burnished Instagram presence and garish office furnishings as his political acumen, former wunderkind congressman Aaron Schock resigned in 2015 after dual Federal probes unearthed wide-ranging campaign finance infractions.
The twin Federal investigations – a Department of Justice (DOJ) subpoena followed by an FBI lighting raid on Schock’s Peoria IL office – culminated in a grand jury indictment involving some 24 criminal charges most of which centered around Schock using taxpayer money to fund his lavish lifestyle. While Schock pleaded not guilty and was never convicted, his once surging political career cratered in the prosecution’s wake and to date has not recovered.
It is the DOJ’s and FBI’s tandem probes against Schock and his erstwhile campaign committee, Schock for Congress [SFC] that form the backdrop for Bopp Law Firm, P.C. v. Schock, et al., 2020 Ind.App.LEXIS 287 (July 6, 2020). The case illustrates in sharp relief the proof problems a law firm suing a former client for unpaid fees faces when it skimps on engagement letter and billing details.
The Plaintiff law firm [the “Law Firm” or “Firm”] sued Schock and SFC in 2016 to recover nearly $160,000 in unpaid legal bills. After a four-day bench trial, the trial court entered judgment for Schock and SFC. The Law Firm appealed.
Affirming, the Indiana appeals court first dispensed with the Law Firm’s argument that it stated a viable account stated claim. In Indiana, as in other states, a party waives a claim by not presenting it in its operative pleadings. Here, the Plaintiff waited until its post-trial brief to first raise the account stated issue. It was too late. Since account stated was never pled in the complaint or litigated at trial, the Defendants were unable to defend against it. As a result, the trial court correctly found that the Law Firm waived its account stated claim.
The Court then held that even if the Law Firm did timely raise an account stated claim, it still would have lost. In Indiana, a monetary amount on a bill or statement is prima facie evidence of the amount claimed which can be disproved by a defendant. Here, the Defendants disproved the invoice amounts by pointing to the Firm’s multiple block-billing entries where it failed to separate work done for individual clients vs. services provided to related entity clients.
The Court then rejected the Law Firm’s other arguments on appeal.
The Court first noted the Law Firm’s tardy subpoena response led to a subsequent search warrant and raid on SFC’s campaign office. The Court then pointed to the Law Firm’s failure to separate legal work it performed for SFC from the work it did for related individuals and entities. The Court chided this “block-billing” as potentially violative of Rule 1.8(f) of the Indiana Rules of Professional Conduct – the ethics rule that provides that a lawyer can only accept compensation from someone other than the client upon client’s informed consent, and where there is no interference with the lawyer’s independent professional judgment.
While the Court stopped short of finding a Rule 1.8 violation, it used the Rule as a guidepost when assessing the Firm’s billing practices.
Questionable optics was another basis for the appeals court’s ruling. It noted the Firm assumed role of trustee responsible for reviewing and approving all bills, including legal bills, issued to SFC. This put the Firm in the impossible situation of self-policing its own legal bills. 
Still another ground on which the Court relied in upholding the trial court was the time entries attributed to attorney Randy Elf – a lawyer who resigned from the Firm after Defendants challenged several of his time entries. The Court agreed with the trial judge that the Firm had an obligation to review all of Elf’s bills. And since the Firm did not, the trial court properly struck all of Elf’s time entries from the universe of recoverable fees.
The Court also credited the testimony of the Defendants’ discovery expert who testified that $30,000 [and not the $90,000-plus charged by the Firm] was reasonable fee for document review and production. The Court conversely discounted the Firm’s rebuttal witness – a Firm lawyer – who testified that the bills were reasonable. The Court noted the Firm’s witness admitted that document review and production did not comprise a large percentage of his practice.
Finally, the Court rejected the Firm’s attempt to recover interest of 1.5% on the unpaid invoices. It upheld the trial court’s determination that the reasonable value of the Firm’s services were $30,000 and that it had already been paid more triple that amount. As a result, the trial court properly found the Defendants did not owe any additional amounts to the Firm.
- Law firms should be sedulous in its engagement letters and billing records and make it clear who is and who is not their client;
- Firms should guard against block-billing and take pains to separate work done for individuals versus services provided to related entities;
- A claim not pled or litigated at trial will be deemed waived on appeal; and
- Law firm should consider hiring an outside auditor to vet legal bills in situations where a firm’s impartiality could be questioned.