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Archive: 2010

CIA Agreed to Pay Legal Fees for Two Private Contractors

December 29, 2010

A recent Associated Press story, “Officials: CIA gave Waterboarders $5M Legal Shield” reports that the CIA agreed to pay at least $5 million in legal fees for two psychologists who created the CIA’s waterboarding and interrogation program.  The psychologists, Jim Mitchell and Bruce Jessen, personally conducted waterboarding sessions inside CIA-run secret prisons.  But to do the job, the CIA had to promise the pair of private contractors that they would cover at least $5 million in legal fees if there was ever a legal inquiry over the interrogation techniques.  This secret deal was even more generous than the protections the CIA provides its own employees, who had to cover half of their insurance premiums after the September 11 attacks. 

According to the report, normally, CIA officers buy insurance to cover possible attorney fees.  It costs about $300 a year for $1 million in coverage.  Today, the CIA pays the premiums for most officers, but at the height of the war on terrorism, officers had to pay half.  The Mitchell and Jessen agreement, known as an “indemnity promise” was structured differently.  Unlike CIA officers, whose identities are classified, Mitchell and Jessen were public citizens who received some of the earliest scrutiny by reporters and lawmakers.  The two men wanted more protection.  The legal bills would be paid directly from CIA accounts, according to sources.

L.A. County Legal Costs Drop as They Increase Hourly Rates for Panel Counsel Law Firms

December 28, 2010

A recent Los Angeles Daily News story, “L.A. County Sees Legal Costs Drop to $105M” reports that Los Angeles County’s legal costs dropped to $105 million last fiscal year, according to a new report.  In 2008-09, L.A. County’s legal cost was a recording setting $114 million.  In the report, Litigation Cost Manager Steven Estabrook said the decrease was primarily the result of a reduction of legal settlements from $40 million to $27 million.

Estabrook wrote the overall attorney fees and costs rose 5 percent to $52 million, primarily because of a rate increase given to 20 contract law firms in late 2009.  “These panel counsel had not received an increase in 15 years and were considerably below comparable public entity market rates,” Estabrool wrote.  “The rate increase brought these panel firms into parity with other panel firms which had not received a similar rate increase last fiscal year.”

NALFA: Wrong for Congress to Cap Attorney Fees in 9/11 Compensation Bill

December 27, 2010

The U.S. Congress recently approved legislation known as H.R. 847 James Zadroga 9/11 Health and Compensation Act.  Now, lawyers for those injured while responding to the September 11 terrorist attacks in New York and Washington will only receive 10% for any settlement achieved on their clients’ behalf.  The attorney fee provision in the legislation would also include a special master, who would be able to reduce attorney fees that he or she determines to be excessive.  The cap on attorney fees was championed by many conservative Republicans, led by Senator Tom Coburn (R-OK), as well as the tort reform lobby.

NALFA is opposed to caps on attorney fees.  “Reasonable attorney fees should be determined by judges, not politicians,” says Terry Jesse, Executive Director of NALFA.  “Attorney fees are not gifts; they are compensation for legal services performed.  It’s troubling that politicians in Washington are limiting compensation in a free market economy.  These caps violate the principles of our free market economy.  Aren’t Republicans supposed to be for the free market economy?” Jesse wondered.

Bad Economy Leads to Rise in Legal Malpractice Claims

December 22, 2010

A recent Insurance Journal story, “Lawyer Malpractice Claims on the Rise” reports that  the bad economy has taken a toll on many businesses and law firms are no exception.  Law firms are being forced to trim employees and expenses in this economy.  From an errors and omission (E&O) perspective this spells trouble for some law firms because such cost cutting measures can result in more malpractice claims.  Michele Wade, executive vice president of Lockton Cos., says downsizing the number of attorneys and staff often leads to client falling through the cracks.  “It leads to possibly the same number of clients and a lot less number of people to help them,” she says. 

Another cause for concern when it comes to E&O claims stems from what Wade refer to as “door law,” a circumstance where law firms might choose to represent any client that walks in the door, even when the case involves unfamiliar territory.  The competition for new business is leading many firms to go after clients not typically within their legal specialty, Wade say.

Another basis for rising E&O claims that has developed as a result of the bad economy are lawsuits against firms arising out of unpaid legal fees.  Wade says may E&O claims are related to legal fees.  “In this economy law firms are not getting paid.  Their collections are way down and they tend to want to sue their client for fees more aggressively than in a good economy,” Wade says.  When client get sued for unpaid legal fees, a counter legal malpractice suit tends to follow.  “Suits for fees draw counterclaims and that bring professional liability claims,” Wade says.

King & Spalding in Fee Dispute with Client

December 21, 2010

A recent law.com story “King & Spalding Sues Vivendi in Fee Dispute” reports that King & Spalding, LLP is suing Vivendi S.A. over its failure to pay legal fees billed for the defense of its ex-CEO following a jury verdict in a securities class action trial resulting in a verdict against the Paris-based telecommunications and entertainment company.

In the suit filed last week in Manhattan Supreme Court, King & Spalding said Vivendi has not paid nearly $866,000 in fees billed in the defense of Jean-Marie Messier, the former CEO who was cleared of liability at the trial in January.  King & Spalding, which continues to represent Messier post-trial and other lawsuits, sought damages for those fees and an order directing Vivendi to pay all his fees going forward.

According to the complaint (pdf), Messier’s fees were initially paid for out of insurance, but became “severely depleted” by 2007.  Vivendi agreed in writing to pay King & Spalding’s fees going forward.  King & Spalding said possibly because of the trial result, Vivendi stopped paying Messier’s fees, which the firm called “unjustified and wrongful”.

NJ Judge Wrongly Caps Attorney Fees

December 8, 2010

A recent law.com story, “Divorce Judge Wrongly Reduced ‘Shocking’ Legal Fees, Appellate Court Finds” reports that a matrimonial judge in New Jersey was out of line when he...

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