14 May 2013 – A federal judge in New York approved a hotly disputed fee for lawyers who negotiated a $217 million settlement with Madoff “feeder funds,” but only after leveling harsh criticism at the firms for trying to obtain excessive markups for low-paid contract attorneys.

In a 43-page opinion issued last week, U.S. District Judge Colleen McMahon rejected the New York Attorney General’s objection to a $40.7 million fee request from lawyers led by Lowey Dannenberg who obtained the settlement from Ivy Asset Managment on behalf of pension funds that lost money in the Bernie Madoff swindle.

“I will not allow the NYAG to take credit for a settlement that, for whatever reason, it did not obtain,” she wrote. “Once the prospect of a settlement disappeared, so did the Attorney General.”

McMahon was critical of the thousands of hours Lowey Dannenberg and other firms including Bernstein Liebhard and Cohen Milstein spent reviewing documents. Critics including the NYAG in this case say class-action firms spend far too much time reviewing documents, knowing they can submit the hours run up by low-paid contract attorneys at a substantial markup.

The private effort required 110 lawyers and more than 67 staff and paralegals, the NY AG said, compared with three lawyers and support staff who combed through the identical set of documents and negotiated a $140 million settlement.

In a March order, McMahon required the lawyers to hand over their billing records so she could determine whether the hours were justified. Yesterday, she generally praised the work of the private lawyers but said she regretted not setting firm ground rules on document review:

There is little excuse in this day and age for delegating document review (particularly primary review or first pass review) to anyone other than extremely low-cost, low-overhead temporary employees (read, contract attorneys) – and there is obviously no excuse for paying those temporary, low-overhead employees $40 or $50 an hour and then marking up their pay ten times for billing purposes. [our emphasis added]

She ordered the law firms to cut their hours submitted for document review by 25%, which will reduce the fee below the suggested $40.7 million by an undetermined amount. Even at the higher level, she noted, it is below the 22% Lowey Dannenberg negotiated with its clients and well below prevailing fee awards in class actions in New York.

McMahon’s decision is also interesting because she says there is “serious question” as to whether the New York AG “even had standing to bring the lawsuits he filed.” Under the doctrine of parens patraiea, she said, the NYAG cannot bring claims for damages on behalf of private citizens or corporations. Having failed to obtain a settlement, “the NYAG had no real ability to recover through litigation the money that plaintiffs had lost – even on behalf of citizens of the State of New York.”

“The weakness of the NYAG’s position as a party to litigation might well explain its failure to take even a single step to move its lawsuit forward,” she wrote.

“Utilizing Technology for Data Management and Information Readiness – Managing False Claims Act Litigation”

Tuesday, April 30, 2013
11:00 AM to 12:00 PM EST

The Lance Armstrong False Claims Act (FCA) suit for violating the terms of his U.S. Postal Service sponsorship agreement is a good example how the FCA can reach far beyond its traditional focus on defective military goods. The False Claims Act has traditionally applied to defense contractors and the U.S. Department of Justice has used the law to attack fraud in healthcare. But today the FCA is expanding its reach into other industries and companies must be able to manage the data and information readiness challenges presented with budget predictability.

In this complimentary webinar, attendees will learn firsthand about topics that matter to the changing FCA landscape including:

• Industries that are likely targets of FCA actions
• The importance of data management and information readiness
• Utilizing technology to lower the cost of defending FCA actions
• How timely data analysis can provide leverage in responding to FCA matters
• Methods of preparation that can provide readiness to defend against FCA litigation

Presenters:

*Todd Haley 

Vice President of Business Intelligence

eTERA Consulting

*Mike Chagnon

Director of Channel Engagements

eTERA Consulting

Feel free to forward this email to others in your organization who would benefit from this web seminar.

TO REGISTER PLEASE CLICK HERE.

25 April 2013 - Interesting story in the Washington Post a few days ago in case you missed it:  the law firm Finnegan, Henderson, Farabow, Garrett & Dunner will reimburse non-lawyer staff members who seek to better themselves by pursuing a law degree.

From the article:

For many prospective students, the decision to go to law school means taking on a hefty burden of debt. But not for future attorneys at Finnegan, Henderson, Farabow, Garrett & Dunner, a law firm that specializes in patent and trademark work. Finnegan has a generous reimbursement program that covers 100 percent of staffers’ law school tuition.

To qualify for the reimbursement, employees must work as “student associates” while they attend law school. These positions are typically part time, and the firm bills clients at a lower rate for the work.

“I signed some checks for Harvard and Stanford in the past year that nearly made me choke,” joked Barbara McCurdy, managing partner. But “the benefit for us is that we attract really excellent talent.”

Erin Sommers is an associate at Finnegan’s Washington office who got her law degree from Georgetown University. She started at the firm as a technical specialist with no legal experience, but she eventually wanted to go back to school. The reimbursement program, she said, helped make that possible.

For the full article click here.

28 March 2013-  Coming hot and heavy after the New York Times piece (click here) on the lawsuit involving DLA Piper and law firm over billing  (“churn that bill, baby!”) comes — the comment and analysis! Of course DLA Piper’s immediate reaction was this is all just an “offensive attempt at humor”, issuing a memo to the entire firm and hastily arranging client conference calls (click here).

Our favorite is the piece by D. Casey Flaherty, corporate counsel, Kia Motors America, who has written numerous posts about the law firm over billing issue.  In a piece today in Law Technology News … calling the DLA Piper story the “most delicious story” of his daily reading … he makes numerous points including:

1. Price is what you pay. Value is what you get (quoting Warren Buffet).

2. The billable hour model creates perverse incentives in aligning price and value.

3. The problem with incentives is that they work — even for lawyers.

4. This is a comedy of a major law firm being brought low by e-discovery.

5. Look at the debate over the enormous fees in the Bernie Madoff fraud case (the court wants to know how the law firms can possibly justify the fees charged).

6.  He talks about the markup of contract attorney fees which we have written about before.

7.  He notes the much maligned contract attorneys in the Quinn Emanuel law suit (for our previous post on this click here).

It is a good read and you can read his full analysis by clicking here.

And the Association of Corporate Counsel has upped its involvement in fights over attorney fees citing several examples: the fee clashes in the DLA Piper case, the February filing of New York Attorney General A. G. Schneiderman opposing class counsels’ fees related to the Bernie Madoff Ponzi scheme case (which we mentioned above), and a federal judge’s decision this week to slash a fee request in half in a suit against daily deal company LivingSocial, citing inefficient staffing and high hourly rates.  For the full story click here.

]]> http://www.theposselist.com/2013/03/28/law-firms-excessive-fees-part-ii-dla-piper-is-not-alone-why-law-firms-overbill/feed/ 0 http://www.theposselist.com/2013/03/26/the-dla-piper-law-suit-offers-a-peek-at-the-practice-of-inflating-a-legal-bill/ http://www.theposselist.com/2013/03/26/the-dla-piper-law-suit-offers-a-peek-at-the-practice-of-inflating-a-legal-bill/#comments Tue, 26 Mar 2013 13:34:49 +0000 mrposse http://www.theposselist.com/?p=7406

26 March 2013- Ah, The Law Factory.  A few weeks ago we had a U.S. District Court ordering a law firm to hand over information about contract attorneys it employed with respect to a lawsuit where the legal fees were deemed “excessive” (click here).

In today’s New York Times another doozy.  The Times has a background story on the lawsuit involving DLA Piper and law firm billing.  Lawyers at DLA Piper traded casual e-mails about a client’s case. One made a sarcastic joke about how the bill was running way over budget. Another described a colleague’s approach to the assignment as “churn that bill, baby!”

The e-mails emerged in a court filing late last week (alert! expect a tsunami of e-discovery pundit commentary to come!) that provide a window into what the Times calls the “thorny issue” of law firm billing. Says the Times: “the documents are likely to reinforce a perception held by many corporate clients – and the public – that law firms inflate bills by performing superfluous tasks and overstaffing assignments.”

For the full New York Times story click here.

6 March 2013- A lawyer who performed document review for Quinn Emanuel Urquhart & Sullivan on a contract basis claims in a lawsuit that he is entitled to overtime pay for work in excess of 40 hours a week.

The plaintiff, New York lawyer William Henig, claims he typically worked 57 to 60 hours a week in the position that began in August 2012 and lasted about six weeks.  Am Law Daily and Above the Law have reported on the case and it has been rocketing around numerous social media sites.  Above the Law has provided a link to the case (click here).   The suit claims the “extremely routine nature” of Henig’s work makes him a nonexempt employee under state and federal laws, entitling him to be paid at one and a half times his hourly rate for overtime.

Henig says he received an hourly wage from the defendants and generally worked 57 to 60 hours each week. Henig alleges he was paid his regular hourly wage for the hours he worked in excess of 40 hours each week, as opposed to the one-and-a-half times that amount required under FLSA overtime rules. (The complaint does not specify how much Henig was paid per hour.)

Named as defendants are Quinn Emanuel and the temp agency that placed Henig, Providus New York. The suit seeks class action status.

Henig is represented by D. Maimon Kirschenbaum who was quoted in Above the Law:  “I have been arguing for years that contract attorneys are entitled to overtime pay under the [Fair Labor Standards Act] and New York law.  However, I have found that contract attorneys tend to be reluctant to file such suits out of fear of being blackballed in the industry.”

As a non-exempt employee, Henig would be entitled to overtime pay at 1.5 times his regular hourly wage under the Fair Labor Standards Act. Since he alleges that he was required to work 57 to 60 hours per week, we’re talking about up to 120 hours of overtime pay for his time at the firm.

But Henig may have a hard time making his case. For most professions, an individual is an exempt employee if he:

1. Is paid at least $23,600 per year (or $455 per week).
2. Is paid on a salary basis.
3. Performs exempt job duties.

Lawyers are considered exempt professional employees since they generally perform work requiring advanced education or training. Exempt jobs tend to be intellectual jobs requiring specialized education and involving the use of discretion and judgment.

And that’s why Henig details the “routine” nature of his job in the complaint. He’s essentially arguing that he worked as a glorified paper pusher, not an attorney. If he wins, it could change the way that contract attorneys are compensated.

Could there be a common denominator between large plaintiff firms engaged in complex or class action litigation and either inequitable compensation or unreasonable fees when compared to that level of compensation?  It will be interesting to see how this litigation proceeds in relation to the Citibank case we reported on earlier this week where the firm was required to divulge information on contract lawyers (click here).

Points made by Posse List members commenting on the Henig case on several web sites:

*You would think the IRS would be pushing this position, and going after the firms for penalties due to massive missclassification of workers. So many of the factors are against the firms, which tend to provide the facilities, location and conduct rules for the reviews.

*Software has automated doc review, much like robots on the assembly line. That’s got to count for something.

*Assuming this contract attorney was primarily doing doc review, just at the actual firm office, this seems like a problem of location. Doc review projects I worked on were off-site, and we were paid overtime. The given firms just strictly controlled when OT hours were approved and to what extent.

]]> http://www.theposselist.com/2013/03/06/contract-lawyer-in-u-s-claims-he-is-entitled-to-ot-pay-due-to-extremely-routine-nature-of-the-job-seeks-class-action-status/feed/ 0 http://www.theposselist.com/2013/03/05/firm-must-divulge-information-on-contract-lawyers-in-citigroup-case-challenge-to-firms-excessive-fees/ http://www.theposselist.com/2013/03/05/firm-must-divulge-information-on-contract-lawyers-in-citigroup-case-challenge-to-firms-excessive-fees/#comments Tue, 05 Mar 2013 14:29:45 +0000 mrposse http://www.theposselist.com/?p=7389

5 March 2013 –  Last week the federal judge in In re Citigroup Inc. Securities Litigation, a shareholder lawsuit against Citigroup being heard in the U.S. District Court, Southern District of New York) ordered a law firm to hand over information about contract attorneys it employed.  It was considered a victory to a shareholder who is challenging the firm’s fees as excessive.

Kirby McInerney, a New York-based plaintiffs’ firm, represented shareholders who in 2007 brought a class action in Manhattan federal court accusing Citigroup of hiding tens of billions of dollars in toxic mortgage assets. Citigroup agreed last year to settle the lawsuit for $590 million.

The agreement resolved claims for massive losses after the bank failed to take timely writedowns on collateralized debt obligations, many backed by subprime mortgages, and engaged in self-dealing transactions that hid the risks.Citigroup has denied wrongdoing.

Kirby McInerney sought almost $100 million in fees, including some for outside contract attorneys, according to court filings.

Ted Frank, a Citigroup shareholder and well-known class action reform activist, objected to the fee request, which he said included rates that were significantly higher than typical hourly rates for contract attorneys in New York. Frank, who would be among the shareholders covered by the settlement, said the fees request was made at the expense of shareholders.

According to Frank, in some cases, plaintiffs’ attorneys billed more than $1,000 an hour for document review performed by outside contract attorneys. More typical rates, Frank said in a court filing, would be $50 an hour.

Frank said in an email exchange with Reuters Legal that about half of the fees Kirby McInerney was seeking was for work contract attorneys performed.

In response, Kirby McInerney said in a January court filing that Frank had “denigrated” the contract attorneys, whose work was “comparable to, and often the same as, the work performed by firm associates.”

Frank had requested discovery in connection with Kirby McInerney’s fee request.

Ruling from the bench, U.S. District Judge Sidney Stein on Thursday ordered Kirby McInerney to submit to the court information about its staff and contract attorneys, including how many worked on the case, their daily time records and expenses.

Stein also granted Frank’s request for biographical information on the contract attorneys, so that he could compare their skills, reputation and experience to Kirby McInerney staff. The firm has said in earlier proceedings that the contract attorneys had similar experience to its staff attorneys, Stein said.

“I think the court, and Mr. Frank, are entitled to specifics,” Stein said at a hearing on Thursday.

Stein, however, denied Frank’s request to depose experts on legal fees.  And most interesting is Judge Stein did not order Kirby McInerney to submit ‘hourly rates’ for contract attorneys.

5 March 2013 – The American Bar Association now requires law schools to be more upfront about how their graduates perform on the job market, but problems with misleading or incomplete employment data persist, according to a watchdog group.

The nonprofit Law School Transparency, formed in 2009 by two then-Vanderbilt law students, examined postgraduate employment data posted on the websites of all 199 ABA-accredited law schools. It concluded that close to half haven’t met the expectations set by Standard 509, the ABA’s tougher reporting requirements.

Law School Transparency stopped short of accusing those schools of violating the standard, saying it’s not in a position to make that determination.

“There has been much ado about the improved accreditation standards, but the improvements are meaningless without compliance and enforcement,” the organization wrote.

It claimed that the ABA has taken no enforcement measures beyond emailing law schools to remind them of the new reporting requirements. Barry Currier, the ABA’s interim consultant on legal education, disputed that assertion. The Section of Legal Education and Admissions to the Bar has had behind-the-scenes contact with law schools regarding compliance with Standard 509, and will continue to request information from schools that may not be meeting the requirements, he said.

“One cannot assume, by the absence of public information, that nothing is going on,” Currier said. He noted that any ABA probe of a law school must remain confidential unless the school chooses to disclose it.

The ABA conducts full accreditation reviews every seven years, but questions about schools’ compliance with its long list of standards can and have been addressed in the interim in some cases, Currier said.

Still, the ABA will examine Law School Transparency’s report to see if it merits action, as it has done with other independent reports of potential Standard 509 compliance problems, he said. The ABA hopes to create a process by which it could review or audit the employment information provided by law schools.

“We’ve stepped up to plate in terms of adding to the reporting requirements, and we are gearing up our enforcement efforts,” Currier said.

The ABA began collecting the more comprehensive jobs data after a series of questionnaire and accreditation standards changes in 2011 and 2012. Law schools now are required to provide two charts of data. One pertains to graduate employment outcomes; the other to conditional scholarships and the percentage of students who retain those grants throughout their time in law school.

Law School Transparency first looked at whether law schools had posted both charts on their websites, as required by Standard 509, and whether it was complete, accurate or misleading. The organization also examined whether law schools went beyond the ABA reporting requirements by releasing the annual hiring report generated by NALP (formerly the National Association of Law Placement) for its graduates. The organization compiled those findings into what it has dubbed the “Transparency Index.” The index rates each individual school on the completeness and accuracy of its jobs data.

Initially, Law School Transparency found that 78 percent of law schools had not met the expectations of Standard 509. More than half—65 percent—had failed to post one or both of the required charts, and 46 percent reported data that Law School Transparency judged misleading, incomplete or inaccurate. The most common problem involved the reporting of graduate salaries—many schools failed to declare the percentage of graduates upon which their salary figures were based, the organization said.

The group informed law school administrators in early February of its findings. In the following three weeks, 84 law schools replied that they had updated their employment data in some way. By the end of the month, the percentage of schools with Standard 509 problems had fallen to 49 percent, and the percentage that had not published one of both of the required charts had fallen to 35 percent.

Additionally, sixty-four percent of the law schools now provide some type of jobs information that goes beyond what the ABA requires, the group said, and 44 percent have made their NALP hiring report available to the public.

Nearly a quarter of the schools earned a perfect score—meaning that Law School Transparency found no problems with their ABA-mandated jobs data and that they had voluntarily provided additional data in 10 specific areas.

“Our hope is that when law schools claim to be transparent and claim to value being open and honest with prospective students, the Transparency Index will provide a check on those claims,” the report reads. “It will be easier to understand what exactly the schools are doing (or not doing) with their graduates’ employment information, and it will allow people to compare school disclosure policies and wonder why certain schools choose to selectively conceal the information they have.”

14 February 2013- The American Bar Association Task Force on the Future of Law Schools met over the weekend.  Some news reports suggest that the task force is taking their charge seriously.  ABC News quotes Task Force member Thomas W. Lyons III as saying “There is almost universal agreement that the current system is broken.”  The article further states:

Lyons, contacted by ABC News, spoke with candor and passion about the ills bedeviling legal education, which, he and other attorneys say, cloud the employment picture for new law school graduates and result in legal services priced high above what many Americans can afford to pay. Graduates, he notes, are entering practice lacking such basic skills as how to prepare routine legal documents.

This is nothing new, or at least nothing that hasn’t been in the public discourse for a while.  The idea that a member of an ABA task force is saying the words may mean a bit more than hearing them from the New York Times.  Some of the ideas include creating a limited-license category of practitioner (someone who can do some things like prepare documents and provide limited legal advice but not other tasks); changing the time required to take a law school program to qualify for a bar exam; and change the emphasis from theoretical to practical.

One group that came in for criticism is law faculty, who were characterized as highly paid while having little connection with practice.  Oh, say it ain’t so.  In fact, someone actually did.  Here’s from the ABC article:

Professor Ngai Pindell takes strong exception to that characterization. Pindell is co-president of SALT , the Society of American Law Teachers, which represents law professors as well as other professionals in legal education.

Pindell, who is also associate dean of the law school at the University of Nevada, Las Vegas, professes not to know what tenured law professors make, but says he suspects they are no more highly paid than dental school or medical school professors.

Really?  A simple Google search on faculty salaries brings up a link to the Society’s newsletter which shows specific school detail on salaries.  The median salary for law faculty at UNLV is $145,000 for example.  The Chronicle of Higher Education has a broader academic salary survey that confirms how law is the highest paid academic discipline.  The average salary for a law school full professor is reported at $134,162.  Medical and dental faculty members are not listed, but full professors in health professions and related clinical sciences show an average salary of $95,437.  Biological and biomedical science faculty salary averages at $92,505.

It’s an odd world from my perspective where practicing attorneys are brought in to a law school as nominally paid adjunct faculty to teach a skills class to law students.  That only suggests the salary structure may be seriously out of whack given the current suggestions to reform law school.