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Category: Legal Spend

NALFA Announces The Nation’s Top Attorney Fee Experts of 2019

August 20, 2019

NALFA, a non-profit group, has a network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted and verified by us.  Here are the nation's top attorney fee experts of 2019:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA
 
"Outstanding Skills Assessing Reasonable Attorney Fees in Class Actions"
Stephen J. Herman
Herman Herman & Katz LLC
New Orleans, LA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Fox Rothschild LLP
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Strong on Fee and Billing Issues in Mass Torts"
Craig W. Smith
Robbins Arroyo LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Borders Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA

Article: How the Contingency Fee Provides Access to Justice

May 20, 2019

A recent article in Legal Intelligencer by Samuel H. Pond, “The ‘Great Equalizer—How the Contingent Fee Provides Access to Justice” reports on the benefits of the contingency fee model in civil litigation.  This article was posted with permission.  The article reads:

The core principle of our legal system is that all people, no matter their station in life, can bring their disputes to be heard in a court of law.  That’s in theory, in practice, however, justice is not always so available to those with limited means.  However, one innovation has somewhat evened the playing field—the contingent fee agreement.

Leveling the Playing Field

The pursuit of justice can be expensive, with litigation costs and attorney fees piling up quickly.  The average billing rate in 2018 for Pennsylvania attorneys was $262 per hour, according to Clio, a Canadian research firm tracking legal industry metrics.  Corporations and insurance companies often have unlimited resources at their disposal during litigation, putting the average person at a great disadvantage.

Under a contingent fee agreement, a client in a civil matter does not need to pay an attorney unless the case is successful.  Often, attorneys will also front all litigation costs.  Thus, the client does not have to pay anything out of their pocket.  Thus, all fees and costs are paid out of the recovery.

‘Not Going to Get Bullied’

This arrangement has greatly expanded access to the justice system and allowed those with modest means obtain the justice they deserve.  It’s the only way an injured worker can go up against a big insurance company and feel comfortable and confident. You’re not going to get bullied.  It’s a great equalizer.

The contingent fee has allowed ordinary people to sue large corporations and influential entities and receive monetary compensation.  In addition, the contingent fee has given credence to the idea all should be held accountable for their actions and no one is above the law.

Incentivizing Success

In addition, the contingent fee ensures that a lawyer’s interests are fundamentally linked to those of the client.  It incentivizes lawyers to provide the best quality service to clients because if they fail, they will not get paid.

The contingent fee agreement also discourages the filing of frivolous matters.  It is highly unlikely that an attorney on a contingent fee agreement will take on a case that lacks merit because doing so would mean investing thousands of dollars on a case with no hope of recovery.

Contingent fees restore some fairness to the system.  A powerful corporation with its economic clout and high-priced attorneys cannot simply steamroll over a litigant of modest means.  The average person can still get a fair shake by hiring a worthy champion to take up their cause.

Samuel H. Pond is the managing partner at Pond Lehocky Stern Giordano, the a workers’ compensation firm.  For more than 30 years, he has been representing workers injured on the job.  He is also the host of the Legal Eagles radio show, which aims to educate the public on the law.

Texas Companies Spend Record Legal Fees in 2017

May 4, 2018

A recent Texas Lawbook story by Mark Curriden, “Texas Companies Paid Record Legal Fees in 2017,” reports that Texas companies paid law firms that represent them a record-setting amount of money in 2017 and an increasing percentage of those legal fees are going to national law firms that have recently opened offices in Houston, Dallas and Austin.

Exclusive new financial data collected by The Texas Lawbook shows that the 50 largest corporate law firms operating in Texas – nearly all of them with offices in Houston – employed essentially the same number of lawyers in 2017 as they did in 2016 and 2015, but those law firms are charging higher rates and making considerably more money.

Nearly two-dozen law firms in Texas, led by Houston-based Vinson & Elkins and national firms Kirkland & Ellis and Winston & Strawn, generated record high revenues last year as a result of them routinely charging corporate clients $1,000 an hour or more.

At the same time, several large Texas legacy law firms are struggling for survival or at least seek stability.  "The Texas corporate legal market is experiencing dramatic changes and these changes are expensive," said Chicago law firm consultant Kent Zimmerman. "The numbers confirm that the rich law firms are getting richer and some long-time Texas law firms are getting left behind."

Legal industry analysts say the most important statistic in The Texas Lawbook data is the fact that revenue per lawyer at 14 law firms operating in Houston now exceed $1 million a year – an amount previously achieved by the most elite and expensive national firms. Only two of the 14 firms – V&E and Baker Botts – are headquartered in Texas.

"The formula for success is simple," Zimmerman said. "The law firms that pay the most get the best lawyers. The best lawyers get the best clients and the best work. The best clients pay the highest rates and generate the best revenues. And then you can use those revenues to pay the best lawyers and the cycle starts over again."

The 50 largest legal practices in the state generated $5.65 billion in revenues from their lawyers who office in the state – a 2.4 percent increase from 2016.

But the data also shows that elite national law firms that have opened offices in Houston and Dallas during the past few years are growing considerably faster than law firms headquartered in Texas and that growth is mostly at the expense of locally based firms.

Two excellent examples are Chicago-based Kirkland & Ellis and New York-based Simpson Thacher & Bartlett.

Kirkland opened its Houston office in April 2014, but it now has more than 130 lawyers and generated an estimated $187 million in revenues in 2017, making it the 11th largest legal operation in Texas.

Simpson Thacher, which debuted in Houston in 2011, has witnessed significant growth the past three years – from $25.6 million in revenues in 2015 to $47 million in 2017, an 83.6 percent jump.

The Texas Lawbook analysis of the exclusive data involving the 50 largest corporate law firms operating in Texas shows that:

  • Nearly 40 percent of the 7,000 corporate lawyers in Texas are now employed by law firms headquartered outside of the state;
  • The Texas offices of national law firms generated $2.57 billion in 2017 – a 38 percent increase from just two years ago;
  • By contrast, lawyers for Texas-based law firms brought in $3.1 billion in revenue in 2017, which is the same amount as the previous two years; and
  • Thirty-three of the top 50 law firms by revenue generated from their Texas offices were based outside of the state – up from three of the top 50 just seven years ago.

To be sure, large Texas legacy law firms – V&E, Baker Botts, Bracewell and Locke Lord, for example – still generate billions of dollars in combined revenues, employ thousands of lawyers and still do a huge majority of the legal work for businesses in Texas. Many of them are experiencing tremendous financial success.

The Texas Lawbook obtained the financial data from interviews with law firm leaders, law partners who recently departed the firms and legal industry analysts. Only one law firm – Houston-based Susman Godfrey – refused to provide any kind of statistics to The Texas Lawbook.

The 2017 data shows that Houston-based V&E is now the largest legal operation in Texas by revenue. V&E lawyers in Austin, Dallas and Houston brought in an estimated $484 million – a 6.6 percent increase over 2016 and a 15.5 percent jump from 2015.

"We had a truly fabulous year – a record year," said V&E Chairman Mark Kelly. "Demand was up, which was good. We have 112 summer associates coming in. So, we are ramping up for another great year and for expansion."

While national law firms have raided V&E for scores of lawyers during the past seven years, legal industry analysts say that V&E has also benefited from the national invasion in one simple way: the elite national law firms with dramatically higher rates provided cover to V&E to significantly increase the rates it charges clients.

Most Texas-based law firms decided to use their lower hourly rates as a marketing tool to retain business. But V&E, according to legal consultants, took the opposite approach.

"The challenge for law firms is attracting and keeping the best legal talent," Kelly said. "For law firms with revenues less than $1 million per lawyer, it will be tough for them to compete. We want the high-end work and that means we need the top talent."

Lawyers in the Texas offices of Baker Botts had $378 million in 2017 revenues for its Texas offices.

Haynes and Boone and Jackson Walker are two Texas-based law firms that increased their lawyer head count and their revenues at their Texas offices.

Haynes and Boone increased its Texas revenues to $272 million, which is 15.3 percent higher than in 2015. Jackson Walker's revenues hit $249 million in 2017, which is a 12.6 percent jump from two years earlier.

"2017 was our best year ever," said Haynes and Boone managing partner Tim Powers. "We saw strong performances across the board and we benefited from our clients doing some really great things.

"We are cautiously optimistic about 2018," Powers said. "The tax reform law will hopefully drive significant investment in Texas and infrastructure legislation could mean good work in the next year. But a trade war could have a devastating impact."

Thirteen law firms have seen their revenues in Texas grow by 20 percent or more from 2015 to 2017. All but one – Houston-based Gray Reed – is headquartered outside the state.

Gray Reed, which has 140 lawyers in Houston and Dallas, has seen its revenues grow from $50.4 million in 2015 to $65.7 million last year – a 30.5 percent jump.

"We've had three consecutive years of record revenues," said Gray Reed managing partner J. Cary Gray, who added that the firm has no interest in growing outside of Texas or merging with another firm. "There are certain legal services that people and businesses need handled by high quality lawyers, but they don't want to pay $1,000 an hour for it. That is our sweet spot."

IBM’s Watson Could Help Reduce Outside Counsel Spend

May 19, 2017

A recent the Corporate Counsel story by Jennifer Williams-Alvarez, “IBM Says New Watson Tool Could Dramatically Reduce Outside Counsel Spend,” reports that, a new tool using International Business Machines Corp.'s Watson, notorious for defeating its human competitors on "Jeopardy" in 2011, is hard at work for in-house legal departments with the goal of significantly reducing outside counsel spend.

So far, use of "Outside Counsel Insights," or OCI, has been limited to legal departments in the financial services industry, according to Brian Kuhn, co-founder and leader of IBM Watson Legal.  But with the potential to save as much as 30 percent on annual outside counsel spend, it's no surprise that the tool has piqued the interest of some of the largest companies in that field.

The service relies on cloud-based cognitive computing system Watson to reveal billing insights to in-house legal departments, Kuhn said.  The development of OCI, which became an official offering late last quarter, stemmed from the perceived desire of legal departments to get their arms around this line item on the budget, he added.

"Outside counsel spend is really a significant concern for corporate general counsel," Kuhn said, noting that "on average, corporate law departments spend one-third to 50 percent of their annual budget on outside counsel."

To cut down on these costs, OCI looks at the amount of time a lawyer spends on a task and at line item descriptions in a budget, for instance, and creates a nearly complete automation of the invoice review process, Kuhn said.  The tool also shows how outside counsel are working, he added, which "tells you not just what lawyers did, but in a very granular way, the order in which they did things."

Together, these two features will help facilitate fixed-fee pricing, according to Kuhn, because legal departments will have a very detailed understanding of the work being done by outside counsel and can then dictate price.  What's more, Kuhn said, a future capability of OCI is to extract insights, such as how a judge ruled on certain motions and how specific lawyers perform on cross-examination, in order to "enforce appropriate legal strategy based on the outside counsel who've worked for you."

"There are other tools out there on the marketplace that offer just a pure analytics approach and they can only parse structured data," Kuhn said, explaining what makes Outside Counsel Insights unique.  "What Watson's good at is actually reading like a person, reading language ... and the ability to take narrative descriptions of legal tasks and time entries and understand what a lawyer actually intends by that in the context of a company's billing guidelines, is really how we move the needle and how we use AI.”

While OCI is currently only used in legal departments in the financial services industry, the potential savings are far from insignificant, Kuhn said.  He pointed out that in just the one industry, IBM's analysis shows that the service can provide a 22 to 30 percent savings on annual outside counsel spend after two years.  In one company with over $1 billion on annual outside counsel spend, which IBM declined to identify as the financial services company does not give its name as a reference, Kuhn said the benefits case showed close to $400 million a year in savings after two years.

There are also plans to expand use of the tool in the future to other industries that rely heavily on outside counsel, according to Kuhn.  "This is definitely not a sexy use of Watson," he noted.  "It's about creating efficiency for the lawyers and it's about massively reducing outside counsel spend."

Report: Wells Fargo Was Too Focused on Legal Spend

April 12, 2017

A recent Bloomberg Big Law Business story by Gabe Friedman, “Wells Fargo Lawyers Were Too Cost Focused, Report Says,” reports on the recent abusive sales practices of Wells Fargo.  The story reads:

After taking six months to investigate how Wells Fargo became enveloped in an abusive sales scandal, Shearman & Sterling has produced a 113-page report (pdf) that lays into the legal department for missing the big picture and focusing too much on legal cost containment.  The report was commissioned by the board of directors, which in September retained Shearman to assist an oversight committee in examining the scandal, in which bank employees created an untold number of fraudulent bank accounts in customers’ names in order to meet their sales targets.

The team of Shearman lawyers interviewed 100 people, mostly in senior management, and reviewed 35 million documents, collected from 300 custodians with FTI Consulting providing data analytics assistance, according to a note within the 113-page report.  It assesses each department in the bank, from human resources to audit, for its contribution to the scandal.  Although the law department is far from alone in the blame, the Shearman team repeatedly knocked the department under former general counsel James Strother for failing to see a pattern and recognize the seriousness in a growing number of incidents beginning in 2011 related to improper sales practices.

Right up until September 2016, “there continued to be a lack of recognition within the Law Department (as in other parts of Wells Fargo) about the significance of the number of sales integrity terminations, and the potential reputational consequences associated with that number,” the report notes.  “The Law Department’s focus was principally on quantifiable monetary costs — damages, fines, penalties, restitution.”

It adds, “Confident those costs would be relatively modest, the Law Department did not appreciate that sales integrity issues reflected a systemic breakdown in Wells Fargo’s culture and values and an ongoing failure to correct the widespread breaches of trust in the misuse of customers’ personal data and financial information.”

Former general counsel Strother, who retired last month, also comes up for serious scrutiny in the report including that the board’s risk committee felt badly misled for a presentation he was involved in.  Most notably, according to the report, in May 2015, three weeks after the Los Angeles City Attorney’s Office filed a lawsuit against Wells Fargo, accusing it of setting unrealistic sales goals that created pressure on employees to resort to opening fraudulent accounts, Strother and Carrie Tolstedt, head of community banking made a presentation to the board’s Risk Committee about the matter.

The Risk Committee specifically requested the number of employees that had been fired up to that point related to improper sales practices, which numbered around 2,600 at that point, the report states.  But this number was deleted from the presentation during a pre-conference call between members of the legal department and Tolstedt’s community banking department — for reasons no one could recall, according to Shearman.

Instead, the Risk Committee heard that only 230 employees had been fired and that “the root cause was intentional employee misconduct, not systemic issues,” according to the report. It was the first time that the committee even heard that there were as many as 230 terminations, and members “felt blindsided by the disclosure,” the report says. 

And in fact, the report notes, the actual number of people who had been fired or resigned as a result of investigations was closer to 2,600 at that time.  “Multiple Board members have stated that they felt misled by the presentation; they left with the understanding that sales integrity terminations were in the range of 200-300 and were largely localized in Southern California,” the report states.  “The Board was not provided with the correct aggregated termination data until well into 2016.”

While the report does credit some members of the law department with making “commendable attempts to address the sales abuses … through work on various committees,” it faults its members for not fully considering “whether there might be a pattern of illegal conduct” rather than a series of discrete legal problems.

Already, the report is being held up as a rare inside look at how a law department failed to mitigate a problem before it grew into a full scandal that resulted in major regulatory fines and executive management changes.  “This is the Wells Fargo Investigative Report.  It is well worth reading.  The next in the chronicles from Enron to GM,” Abercrombie & Fitch’s general counsel Robert Bostrom wrote on LinkedIn on Monday.

Amar Sarwal, vice president and chief legal strategist of the Association of Corporate Counsel, agreed that the report is likely to be studied by lawyers in the future.  “Normally you’re not going to have the confidential workings [of a law department] exposed like this,” Sarwal said.

The fact that it is written by a law firm, and critiques a corporate law department for focusing too much on cost containment and not seeing the big picture marks an “intriguing turnaround” from the normal roles, he added.  It is more common to hear corporate law departments critique law firms for being too focused on the billable hour and not spending enough time learning their client’s business.

The Shearman team was lead by New York partner Stuart Baskin, a former federal prosecutor in Manhattan.  Baskin previously represented J.P. Morgan’s board of directors as it dealt with the London Whale scandal, which involved a trader who accumulated an outsized position in the credit default swap market and lost $6.2 billion, raising questions about the bank’s risk management system.

Sarwal said the report puts a spotlight on the fact that all corporate lawyers, both in house and at law firms, face a tension between advising their client on a specific matter, and advising them on how to run their business.  “There’s this idea that the lawyers are the conscience of the company, but they’re not,” he added.

Instead, they operate within the hierarchy of the company and have to work with other executives to identify and solve problems.  He criticized the report for not contextualizing what else the law department had on its plate as the sales abuse problem unfolded, but nonetheless praised it as useful information.  “For GCs, this report is just another reminder that your job involves trying to change a real culture of human beings,” said Sarwal.