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Law Firm Sued Over ‘Needless’ $2.8M Discovery Bill

September 16, 2020 | Posted in : Billing Practices, Billing Record / Entries, Defense Fees / Costs, Ethics & Professional Responsibility, Fee Dispute, Fee Dispute Litigation / ADR, Hours Billled, Lawyering, Legal Bills / Legal Costs, Litigation Management

A recent Law 360 story by Alyssa Aquino, “Eckert Seamans Sued Over ‘Needless’ $2.8M Discovery Bill,” reports that Eckert Seamans Cherin & Mellott LLC racked up $2.8 million in "needless" discovery charges while steering an immigration services company through breach of contract claims and several government investigations, according to a complaint filed in Virginia federal court.  Georgia-based Nexus Services Inc., which provides immigrant bail securitization services, is accusing Eckert Seamans attorneys of performing thousands of hours of surplus document review and then covering up the surcharges with vague billing statements.

"Eckert violated the rules of professional conduct and thereby breaches its contract with Nexus in that Eckert billed for legal services which were unnecessary and served no particular purpose or benefit to Nexus," the company said.  The suit was initially filed in a Virginia state court on July 31, but Eckert Seamans removed the case to federal court, saying that the companies weren't residents of the same state.

According to Nexus' complaint, Eckert Seamans represented the company between October 2018 and April 2020 in a dispute with a bond surety company over a contract breach.  A previous law firm had already handled all of the original preliminary injunction work and constructed Nexus' defense by the time Eckert Seamans arrived on the scene, the complaint said.  "The prior law firm's work should have considerably lightened Eckert's efforts regarding framing the issues and the initial work of the litigation defense," Nexus said.

Nexus pulled Eckert Seamans off the case right before the litigation advanced to pretrial cross motions for summary judgment.  However, the firm racked up 6,500 hours of billable hours, amounting to over $1.89 million in legal fees, despite only performing work "between major pre-trial motions," Nexus alleged.

According to Nexus, Eckert Seamans' attorneys billed for 4,300 hours of document review work and then enlisted outside reviewers who charged for an extra 1,400 hours.  The work was of the "basic, low-level assembly-line" variety, Nexus argued, and would have only required the cheaper, outside reviewers.  Nexus attributed the inefficiency to firm mismanagement: "poorly-trained" junior associates reviewing documents without sufficient supervision and senior attorneys being allowed to perform excessive document review work that served "no particular purpose."

The company further accused Eckert Seamans of overcharging for its work on three different government investigations, saying it received a $1 million legal bill even though the bulk of Eckert Seamans work was on "unreasonably excessive" document review.  The complaint lacked further details on Eckert Seamans' government investigations work.  According to Nexus, Eckert Seamans attempted to cover up the specifics of its charges by submitting bills in a "block style" that broadly described what the firm was charging for.

Harold Balk, chief development officer at Eckert Seamans, said in a statement to Law360 that the firm completed "substantial legal work" for Nexus, all of which was necessary and authorized by the company, outside general counsel and internal management.  Balk added that Nexus has yet to fully pay its legal bills, leaving a $1.4 million outstanding balance.

"Nexus never claimed any 'overbilling' by Eckert Seamans until the firm sought to resolve — without filing suit — the accounts receivable," Balk said.  "Nexus chose to litigate rather than negotiate in good faith. … We regret that Nexis has opted to make these false and baseless accusations in a public forum."