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Suit Alleges Law Firm Overbilling for Defense Work, E-Discovery

May 13, 2020 | Posted in : Billing Practices, Billing Record / Entries, Defense Fees / Costs, Ethics & Professional Responsibility, Expenses / Costs, Fee Agreement / Fee Proposal, Fee Dispute, Fee Dispute Litigation / ADR, Legal Bills / Legal Costs, Legal Malpractice

A recent Texas Lawyer story by Brenda Sapino Jeffreys, “Houston Retailer Alleges Offit Kurman Overbilled for Defense Work, E-Discovery” reports that a Texas lawsuit alleging “unconscionable conduct,” including overbilling and negligence by a Philadelphia partner of Maryland-based Offit Kurman, is now in federal court in Houston, where the plaintiffs are seeking more than $1 million in damages.  Houston online retailer LuxeYard and its owner Amir Mireskandari alleged in their petition, originally filed in state district court in Houston on April 13, that Offit Kurman and partner Frank Noyes not only overbilled them for work while defending them in underlying litigation, but  mishandled the litigation, which resulted in them having to pay $450,000 in settlements in other lawsuits.

“[T]his lawsuit is brought to disgorge all fees paid to defendants and recover the damages caused by defendants’ gross incompetence in the name of morality and justice,” LuxeYard alleged in the petition.  The suit alleged overbilling, block billing and duplicative billing, as well as fee churning.  Offit Kurman, which has grown its head count dramatically in recent years, now has well over 200 lawyers throughout its 13 offices along the East Coast.

It’s far from the first large firm to be hit with allegations of overbilling.  In Texas last year, Morrison & Foerster settled a lawsuit filed in state court by a group of former clients who alleged the firm engaged in “egregious overbilling.”  Last December, a Boston-based partner at Duane Morris was suspended for six months from the Massachusetts bar for inflating her billable hours when she was a partner at Saul Ewing Arnstein & Lehr.

As alleged in the petition, LuxeYard hired Noyes in February 2019 to defend the company and its owner in two lawsuits that had been filed in Delaware.  They paid Offit Kurman a retainer of $8,000.  The suit alleged that Noyes “pressured” Luxeyard to hire a specific electronic discovery company and the service would only cost the plaintiffs $4,000.  However, the service billed the plaintiffs a “huge sum of money over the next several months” and Noyes and his team “spent the next few months engaging in meaningless and irrelevant tasks,” and billed “excessively” for associates to research basic legal theory.

“Noyes and at least one other associate repeatedly and concurrently researched the same or similar issues of law, double-billing plaintiffs on several days, and sometimes on the same day,” and also held several in-office meetings with all personnel that generated “tens of thousands of dollars in legal fees.”

The plaintiffs also alleged that Noyes “never filed any dispositive motions on behalf of the defendants,” failed to meet deadlines, and on more than one occasion almost inadvertently produced Mireskandari’s personal financial documents.

In September 2019, Noyes filed a motion to withdraw as counsel, “citing plaintiffs refusal to pay their outstanding invoices,” a development that Mireskandari and his company alleged “forced” them to settle two related lawsuits for $450,000.  Additionally, the petition alleged that a large percentage of the defendants’ billing—a total of $79,353—was so-called block billing, which involves recording multiple tasks as a single billing entry.

“Defendants’ gross incompetence, inefficient billing practices and fee churning resulted in plaintiffs being forced to settle two connected cases in the amount of $450,000, and pay $45,000 in legal fees and expenses to defendants and for which they should not have been responsible,” the petition alleged.  The plaintiffs alleged the defendants engaged in “churning literally more than $120,000″ in attorney fees.