Contract attorney rates, attorney billing rates, and lodestar
Jan 26th, 2009 | By mrposse | Category: Contract Attorney PrimersBack in November 2008 we commented on the settlement negotiations around Carlson v. Xerox case (click here). The noteworthy item for contract attorneys was the issue “can you pay a contract attorney $35/$40 an hour and bill them out at $500?” The court was to have the final say.
The case has now been settled, approved by the court. It is one of the top securities fraud settlements in American history. See full story here.
Judge Alvin Thompson in the U.S. District Court in Hartford awarded $120 million in attorneys’ fees, plus $3.3 million in costs. There was dissent from Xerox’s lawyers during a hearing in October. They argued that contract attorneys were hired by plaintiffs’ counsel and paid $55 an hour but that their hours were included in the plaintiff attorney fee request at $300 an hour.
Note: in the October/November stories the hourly rates were quoted as $35 and $40 per hour.
Judge Thompson determined that the calculations made by plaintiffs’ counsel were fair. Ultimately, the court determines attorneys’ fees based on the number of billable hours multiplied by an appropriate rate. The court may increase that figure, known as the lodestar, by applying a multiplier based on factors such as risk of litigation and attorney performance. Seems astronimical to us but we don’t have all the numbers to run it so what do we know.
For more on the lodestar calculation click here, here and here.
Everyone knows the entire legal system is a scam, and everyone in America hates lawyers.
The only people in the legal system who should be worried about high billing rates for contract attorneys are law students with a lot of debt and young associates. Who needs to hire 50-100 young associates every year at $160,000 a piece, when you can hire an army of temps that bill out at $300?
My, aren’t we jaded.
As a contract attorney, I question why it shouldn’t “worry me” that I am paid $35 an hour and billed out at $300. Certainly when I was an associate I was also billed out much higher than I was paid, but it was less extreme – and I got health benefits, 401K, paid MCLE, paid bar dues, paid parking and all the other perks that go along with the misery of firm life.
I still have a lot of law school debt. Just because I left practice doesn’t mean my loans suddenly went away. It’s the reason I am working as a contract attorney. And with my four years of litigation experience, I am not replacing new hires or young associates. I’d also like the name of the firm that was hiring 50-100 your associates annual (or the key to your time machine.)
[...] The practice of law firms marking up the cost of contract lawyers has been around for ages. See some of our previous posts about the subject: a great analysis by Carolyn Elefant by clicking here and further analysis by clicking here. [...]
[...] about the subject: a great analysis by Carolyn Elefant by clicking here and further analysis by clicking here. This week there was an article rocketing around the internet which was written by Cardozo Law [...]
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