Opinion No. 1995-10

(Inquiry No. )

Allocation of travel expenses between two clients when a lawyer is traveling on behalf of only one client.
An attorney who performs work for one client while traveling on behalf of another client may only bill all travel expenses to the client on whose behalf the attorney is traveling.
Code Provisions:
DR 2-106(A)
Facts Presented:
Inquiring counsel, like most attorneys, must occasionally travel on client business. Inquiring counsel’s retainer provides that clients will pay inquiring counsel for all of his time while traveling, and will reimburse inquiring counsel for his reasonable travel expenses. However, while traveling on behalf of Client A, inquiring counsel occasionally performs work on behalf of Client B. When this happens, inquiring counsel charges Client B for this time just as he would if he performed the work in his office. However, because inquiring counsel is traveling solely to serve Client A and not to serve Client B, and because only Client A has authorized the particular trip, inquiring counsel bills all of his travel expenses to Client A and none to Client B. This is true even if inquiring counsel works on Client B’s matters during the entire time he is traveling on Client A’s behalf.
May inquiring counsel properly bill all of his travel expenses to the client on whose behalf he is traveling even though he performs work for another client while traveling?
Yes, subject to stated qualifications.

DR 2-106(A) provides: “A lawyer shall not enter into an agreement for, charge or collect an illegal or excessive fee.” (Emphasis added.) This Committee has previously made clear that DR 2-106(A) also prohibits an attorney from charging excessive expenses. See Nassau Ethics Op. 94-25 (1994) permitting an attorney to charge litigation clients flat monthly fee of $25 to cover expenses such as telephone, copying, and postage provided the flat fee for expenses is not “excessive” under P2-106 (A) ) ; accord, ABA Formal Ethics Op. 93-379 (Model Rule 1.5 (a)?s mandate that fees be “reasonable” also applies to expenses). See generally Stephen Gillers, Billing for Costs and Disbursements: What Law Firms Can Charge and Clients Can Expect (Pitney Bowes Management Services 1995).

More recently, in Nassau Ethics Op. 95-4, this Committee held that an attorney who spends time on behalf of Client B while traveling on behalf of Client A must deduct that time from Client A’s bill, even though he is traveling solely on behalf of Client A. Even if the attorney does not bill Client B for the time spent while traveling on behalf of Client A, the attorney must still deduct that time from Client A’s bill. The reasoning is that if the attorney had not been working on Client B’s matter, he could have worked on Client A’s matter. In short, an attorney who works for two different clients while traveling must allocate the billable travel time pro rata between the two clients.

Inquiring counsel now asks whether the attorney must also divide his travel expenses between the two clients in proportion to the amount of time he spends on each client’s matter. In Nassau Ethics Op 95-4, supra, this Committee suggested that the cost of a limousine driver ought to be allocated pro rata between the two clients. However, the question of allocating travel expenses was not squarely posed in Op. 95-4, and inquiring counsel believes that travel expenses should not be allocated pro rata. In his letter of inquiry, inquiring counsel stated as follows:

Client A — for whom the attorney is taking the trip — should be billed for the entire cost of the driver. The rationale for billing Client A for the driver is that it is cheaper for Client A to pay for the driver than to pay for unproductive attorney time if the attorney drives himself or herself …

There is no rationale for billing Client B for the driver. Client B did not ask the attorney to take the trip, Client B does not care whether the attorney is in a car, or in his office, or at his destination, when the attorney phones Client B.

The Committee agrees with inquiring counsel. If an attorney travels solely for the purpose of serving Client A, then the entire cost of the trip must be charged to Client A even if the attorney performs work for other clients during the trip. Otherwise, the other clients would be asked to pay for travel expenses that they never requested or authorized and that do not confer any benefit on them. To the extent that “Point 3” of Nassau Ethics Op. 95-4 Contradicts this opinion, it is withdrawn.

Of course, if an attorney is making a trip on behalf of two different clients — for example, if the attorney is hiring a driver to go to court for two different clients, or is flying to another city to work on matters for two different clients — then the attorney should allocate the travel expenses fairly between them. Whether the division will be equal depends on the precise circumstances, but that question is not posed here.

[Approved by the Executive Subcommittee on 8/22/95; approved by the Full Committee on 8/30/95]