WASHINGTON, D.C. March 26 (DPI) — A NYTimes.com blog post on a billing dispute between behemoth firm DLA Piper and an angry client triggered more than 300 reader comments this week. Many comments were from lawyers lamenting the ethical lapse and erosion of trust from excessive or fraudulent billing.
It’s an old discussion, of course. But the dispute between DLA Piper, with more than 2,000 lawyers the largest firm by headcount in the US, and a disgruntled client has revived the debate over billing practices in the law. Part of it is that the case has gotten ugly: The plaintiff, after receiving 2,500 pages of discovery documents from DLA Piper, disclosed a raft of cynical and damaging emails that circulated among DLA lawyers.
One lawyer congratulated other partners in an email: “I hear we are already 200k over our estimate — that’s Team DLA Piper!”
According to the DealBook report, DLA Piper sued the client, energy company executive Adam H. Victor, for $675,000 in unpaid legal bills. Mr. Victor countersued and accused the firm of a “sweeping practice of overbilling.”
http://dealbook.nytimes.com/2013/03/25/suit-offers-a-peek-at-the-practice-of-padding-a-legal-bill/
Reader comments, even those from lawyers, expressed dismay that DLA Piper so blatantly abused the billing process. But some lawyers admitted a fundamental, longstanding practice at all levels of the law: “The size of the bill is heavily weighted to the size of the case and ability to pay.”
Among the most recommended comments:
As a lawyer who supervised other lawyers and partners, I used to work on and contribute to the bills for a huge law firm, and can tell you from personal years of experience this is common. What is unusual is that the lawyers would document this in writing. The common practice is worse. The norm is for the partner in charge to adjust the bills to fit the client’s wealth and the size of the case. As an example on a case saw worth $5m to a large corporate client in litigation, if the bill was say $10k for a month but there was important work, the partner in charge might add another 30hrs of his time, thus increasing the bill say another $15k as $500/hr. This is just an example.
I have personally seen senior partners put 10-30 hrs on a case that they knew nothing about just to 1) increase their own billing hours for the month, 2) increase the bill, 3) or just as normal practice. They will bill time for conferences, reviewing notes or pleadings, these sort of generic time entries that will not be questioned and are difficult to detect as created from nothing. The size of the bill is heavily weighted to the size of the case and ability to pay.
The law student who commented that expertise was built by associates doing work is correct, but that is not the motivation, it’s billable hours and money. Lawyers working with me when I first started at a firm would brag that they got in the office at 11am and had already billed 9 or 10 hours. It is all about billable hours.
Such revelations are likely to accelerate major changes in the profession at all levels. Corporate America for years has been reining in high legal expenses by bringing routine legal work in-house. But the more fundamental issue of how firms bill clients — by the hour, rather than by the project — may give way to new approaches.
What’s more, recent reports of law schools reassessing their “business model” as law students run up debt and today can’t find jobs to pay back that debt. That crisis may lead to two-year law-school programs, some academics are saying. A recent column in The Wall Street Journal by Joe Queenan likened law school to a Nigerian telephone scam:
http://online.wsj.com/article/SB10001424127887323393304578358583587338070.html