The June 13th story about Fleishman-Hillard, "Software No Fix for Billing Fraud," misstated the charges against Doug Dowie, former general manager of the public relations firm's Los Angeles office. The indictment against Dowie alleges that he conspired to cause another unnamed individual to fraudulently increase the bills on a contract with the Department of Water & Power.
How was Fleishman-Hillard Inc. executive Doug Dowie supposed to have over-billed clients, considering that the giant P.R. firm uses sophisticated software to track precisely how many minutes and hours its employees are putting in for their clients?
Easy Dowie, according to an indictment handed down by federal prosecutors, overbilled L.A.'s Department of Water & Power and other clients by making hand-written corrections onto electronically-derived billing worksheets.
So much for sophisticated software.
While billing programs are commonly used by professional services firms, the indictment affirms what has been an open industry secret: these systems do little to stop fraud, and many are not even designed to do so.
"The computer program is basically allowing you to more efficiently manage data. That's all it does," said Richard Kline, Fleishman's current regional president, senior partner and Los Angeles general manager. "It should help you accurately compile that data, but it doesn't have any impact on the ability to manage the accuracy of the data itself."
It's a problem that goes to the heart of hourly billing, which has been an accepted practice for legal, accounting and public relations services since the 1960s. That system is designed to fairly value the services of creative and intellectual-driven firms whose productivity cannot be measured by the number of products sold. But it has long lent itself to questions about inflated or fraudulent billing.
Professionals have been known to bill each client separate invoices for the same work done by the same person. They also have been known to bill a half-hour rate for a six-minute phone call, or bill a 25-hour day.
"Almost everyone who hires professionals by the hour has had experiences where they felt they were cheated," said John Toothman, president of The Devil's Advocate, an Alexandria, Va.-based legal fees management and consulting firm. "It's a hard thing to prove, but I don't think it's uncommon."
The American Bar Association found in a 2002 report that billable hours had "reached unreasonably high levels" and that in some circumstances a lawyer will simply "make it up," often under pressure to report higher numbers.
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