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Category: Ethics & Professional Responsibility

NJ Judge: Litigation is Just Another ‘Capitalist Enterprise’

October 7, 2019

A recent Law 360 story by Emma Cueto, “Legal Practice Just a ‘Capitalist Enterprise’, Judge Laments,” reports that a New Jersey state judge ruling on an attorney fee dispute lamented that the practice of law has been reduced to "just another capitalist enterprise," before deciding that the former attorney in a personal injury case against Verizon was not entitled to a say in the approval of a potential settlement.

In an order that was deleted for a "typographical error," according to the judge's chambers, Judge Stephen L. Petrillo said that Gregg Stone, the original attorney for a woman who was paralyzed after she was struck by a falling utility pole, would be entitled to seek compensation for the work he put in on the case but could not object if he thought the settlement fee award was too small.

First, however, Judge Petrillo expressed his displeasure that the dispute had arisen at all.  "This unfortunate fee dispute, coming as it does in the midst of seemingly final negotiations of a settlement, should resolve, with certainty, any lingering doubt that the practice of law, that storied profession of Marshall and Jefferson and Lincoln, is really now just another capitalist enterprise," he wrote in the order.

The case was brought in 2017 by Maria Meister and her husband, Peter Meister, against Verizon New Jersey Inc. and two other companies, Altice USA and PSEG Services Corp.  According to the order, Maria Meister was struck by a utility pole that fell after partially rotting through, leaving three of her limbs paralyzed.  Gregg Stone initially represented her, but two years later withdrew due to a breakdown of the attorney-client relationship, citing "incessant emails" as well as "ultimatums and non-physical threats" by Peter Meister, according to his motion.  David Mazie then took over the case, which is potentially nearing a settlement, the decision said.

Stone asked the court that he be allowed to be heard during the settlement approval process, arguing that his retainer agreement entitled him to recover a portion of the funds.  He also argued that Mazie, having taken on the case at the eleventh hour, had no incentive to ensure that any settlement properly reflected the years of effort the case involved.

Judge Petrillo, however, rejected this argument, saying that it was not supported by case law.  Stone would be allowed to petition for a cut of any attorney award based on the work he put in, the judge said, but his retainer agreement stopped being binding when he withdrew from the case, and he did not have the right to intervene in the approval process.

He also said that the whole episode did not reflect well on the legal profession.  "While lawyers may indeed make a client's life better through their advocacy and vigilant protection of that client's interests," the judge wrote, "they are uniquely able to make it seem as though they are not doing so when quarreling, as they are here, over who gets to spell out how much they should be paid from their paralyzed client's recovery and why one is more entitled to do so than another."

He later also lamented in a footnote that the attorneys seemed invested not in deciding who could represent the Meisters' interests, but rather who could have a say in how much the attorneys were paid.  Mazie told Law360 that he believed the judge's displeasure was directed solely at Stone, saying that Stone's request was not in line with the law.  "It is unfortunate that Mr. Stone fails to recognize that the only thing that is important is doing what is best for the clients, not what is best for the lawyers," Mazie said.  "The court clearly got it right here."

The order, which was issued on Wednesday, was deleted on Friday, along with an order on a discovery motion.  Judge Petrillo's chambers told Law360 that the orders were deleted because of a "typographical error" but that the substance of the orders would not be changed.  The judge had no further comment on the case, according to a member of his staff.

Article: Block Billing Helped Obscure Overcharges, Plaintiffs Allege in Suit

October 1, 2019

A recent article by Karen E. Rubin of Thompson Hine LLP in Cleveland, “Law Firm’s ‘Block Billing’ Helped Obscure Overcharges, Plaintiffs Allege in TX Federal Suit,” reports on the ethics of block billing in a federal action in Texas.  This article was posted with permission.  The article reads:

Five businesses filed suit earlier this month in a Texas federal district court against Morrison & Foerster, a 1,000+-lawyer mega-firm headquartered in San Francisco.  The case is unremarkable in most ways: on the one hand, former clients who assert wrongdoing in how the law firm handled their matters (including billing improprieties) and a less–than-desirable outcome – and on the other hand, a law firm that says “Don’t believe everything you read in a complaint, the claims are baseless and we will win.”  (MoFo told the ABA Journal last week that “[t]he complaint has no merit” and that the firm “will be vindicated.”)

What is noteworthy is one of the allegations about the firm’s billing.  The plaintiffs claim that the firm’s misdeeds include “block billing.”  By grouping multiple tasks in a single time entry, the plaintiffs allege in the complaint, Morrison & Foerster made it “impossible to determine exactly what tasks were performed and the amount of time allegedly spent for such tasks.”

Ye olde one-line fee bills

At this early stage, the allegations in the complaint remain unproven, and it can’t be known to what extent MoFo may (or may not) have sent invoices that block-billed discrete tasks.  Certainly, in days of yore it was common for law firms to send invoices summarizing the services provided.  (It was also common to see fee bills with one line: “For services rendered…” and then the dollar amount.)  In the 1980s, say, it was certainly easier to dictate a summary of the work done on a matter than it was to break out specific tasks.  (Those of us who were young and tech savvy in those bygone days would use our fancy Dictaphones™, though the senior partners would have their secretaries take dictation on a steno pad.)

Today though, most of us put our daily time charges directly into software that will spit out a list of charges for the month.  Preparing a “summary” of those charges actually requires more work than giving the client a detailed description of how much time was spent daily on what and by whom.  Why ever spend the time summarizing?

But what the plaintiffs in the case against MoFo might be alluding to is the practice of stringing together many short tasks in one running description and assigning a single combined time charge to those discrete tasks.  That can effectively obscure how much time the lawyer spent on each of those tasks – which is something clients now expect to be informed of.

Billing rules of the road

There is no ethics rule that says you may not “block bill” (though many corporate clients today have outside counsel guidelines that prohibit the practice).  But several ethics rules are broadly relevant, including your jurisdiction’s version of Model Rule 1.4(a)(3) (keeping the client reasonably informed about the matter); Model Rule 1.5(b) (communicating the basis of the fees and expenses); and Model Rule 1.5(a) (not charging an unreasonable fee).

ABA Ethic Opinion 93-79 vividly describes a number of billing no-no’s, including: billing more than one client for the same hours; billing time during travel to one client while working on another client’s matters and billing the second client as well; “continuous toil on or overstaffing a project for the purpose of churning out hours;” and marking up expenses, such as meals.  (The latter practice prompted the ABA Ethics Committee to opine colorfully that “[t]he lawyer’s stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services.”)

Blocking and tackling

When a client alleges misconduct against a lawyer or firm, the burden of proof is on the client.  But what we know about the tendencies of juries suggests that any lawyer should want to be in the best position possible to justify his or her fee if it is ever called into question.  We’re not playing football here – less blocking is better.

Karen E Rubin is a member of Thompson Hine’s business litigation group.  She is a former chair of the Certified Grievance Committee of the Cleveland Metropolitan Bar Association, and a member and past chair of the Ohio State Bar Association’s Ethics Committee.  She also chairs that committee’s Ethics Opinions subcommittee, and has authored several ethics opinions on behalf of the OSBA interpreting the Ohio Rules of Professional Conduct.  Karen also is an adjunct professor at Cleveland-Marshall College of Law, teaching legal ethics.

Hourly Rate Data Can Be Sealed in Army Case in Federal Claims Court

September 30, 2019

A recent Law 360 story by Daniel Wilson, “Law Firm Rates Can Be Sealed in Claims Court Army Dispute,” reports that a property owner can file under seal a comparison of law firm billing rates meant to help determine its attorney fees after winning a takings claim against the Army, as that comparison is a commercial document not based on public data, the Court of Federal Claims ruled.  A compilation of law firm billing rates by Thomson Reuters and put forward by Waverley View Investors LLC is not based on publicly available data and is protected by a contractual confidentiality clause, and therefore can be considered confidential commercial information, Judge Charles F. Lettow ruled.

"The issue in this dispute is a close one because the public's right to access to court records is strong," Judge Lettow said.  "Nonetheless, the court finds that the Thomson Reuters compilation to be provided by Waverley in connection with the present claim for attorneys fees constitutes proprietary and confidential commercial information that is deserving of protection under [the rules of the claims court]."

Waverley, which owns land in Frederick, Maryland, won a constitutional takings claim against the Army in January 2018 after the Army — looking for contamination stemming from Fort Detrick, an Army installation that borders Waverley's land — left a gravel access road and groundwater contamination monitoring wells on Waverley's land following the expiry of a right-of-entry agreement.  The landowner was awarded damages of about $56,500 in March that year.  Waverley asked for attorney fees last month after the Federal Circuit affirmed the claims court's original decision in May.

As part of that request, the landowner asked to file a document compiled by media and commercial data firm Thomson Reuters, a chart reflecting the billing rates of its counsel, Crowell & Moring LLP, and five other peer firms in the Washington, D.C., market — Akin Gump Akin Strauss Hauer & Feld LLP, Arent Fox LLP, Arnold & Porter, Pillsbury Winthrop Shaw Pittman LLP and Steptoe & Johnson LLP.

It urged the court to allow it to file that billing rate compilation under seal as confidential commercial information, but the government pushed back, arguing billable rate comparisons aren't protectable as either confidential business information or trade secrets.  The disputed rate compilation is based on law firms' own data, self-reported to Thomson Reuters, and "is available for purchase by anyone willing to pay the price — including competitor law firms," the government said.

The government noted the claims court had previously rejected an effort by the plaintiff in another case to file a billing rate document under seal, as those rates — self-reported by the relevant law firms to the National Law Journal and to professional services firm PricewaterhouseCoopers — were "easily obtained from public sources" and wouldn't result in any harm to the relevant law firms.

But the document Waverley wanted to file under seal was different, the landowner said.  Only law firms that want to participate in, and pay for, the Thomson Reuters platform — providing access to their own financial data to gain access to other law firms' data — can access that data, it noted.  And it is "unvarnished" data collected directly from law firms' billing systems, unlike the self-reported data law firms provide to the media, according to Waverley.

The nature of that nonpublic data, as well as the related contractual pledge of confidentiality that participants in the system must agree to, are key differences compared to that earlier case involving publicly available billing data, and therefore Waverley had met its burden to justify a protective order, Judge Lettow said.

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.

ISBA Mutual: Policy Won’t Cover Attorney Fee Disputes

September 16, 2019

A recent Law 360 story by Celeste Bott, “Novartis Whistleblower Attys Slam ‘Unjust’ $1.4M Fee Award,” reports that the Illinois State Bar Association Mutual Insurance Co. asked an Illinois state judge to declare it has no duty to defend an Illinois attorney fighting a lawsuit over alleged overbilling, saying lawyers' billing functions aren't a covered professional service.  The money at issue would not be considered damage under its policy, the insurer said in a Cook County Circuit Court complaint.

ISBA Mutual contends it's not on the hook for a fee dispute between Chicago attorney Alan E. Sohn and his firm and Randy Sly, the executor of an estate seeking to recover more than $280,000 stemming from "unreasonable and unnecessary billing" by Sohn.  Sohn's July 2016 to July 2017 insurance policy covers claims arising out of a wrongful act, including the "rendering of or failure to render professional services."

ISBA Mutual defines that term to mean "services rendered by the insured as a lawyer, including services, whether or not for a fee, as an administrator, arbitrator, conservator, executor, guardian, mediator, notary public, personal representative, real estate title insurance agent, receiver, trustee or in any other similar fiduciary activity," according to the filing.  Not included in that definition is the billing function of a lawyer or law firm, ISBA Mutual said.  The insurer said the suit against Sohn seeks recovery of money that wouldn't be considered damages under the policy, including fees "incurred as a consequence of the firm's or Sohn's billing."