DLA Pipergate: A Story of Greed, Arrogance & Client Naiveté
Someone’s not telling the truth. And I don’t mean like-kinda-not-telling-the-truth, but really-not-telling-the-truth. It’s either me, or the boys over at DLA Piper.
Here’s my take, from my last post:
What is the realistic percentage of attorneys who can pull off a never-ending series of highly productive 14-hour days, year after year, and honestly bill around 1900 a year? I’m thinking the number is closer to a goose egg than even 5 or 10%. Which means that closer to a 100% have fallen into the standard “churn that bill, baby!” mode.
Here is DLA Piper’s public response (to the New York Law Journal):
We hold ourselves to the highest legal and ethical standards. The behavior as described is unacceptable to DLA Piper and our clients. The emails were in fact an offensive and inexcusable effort at humor, but in no way reflect actual excessive billing.
Hmmm. Really? What exactly is your definition of “actual excessive billing”? Here’s one of those “humorous” emails:
“Now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode,” Mr. Thomson wrote. “That bill shall know no limits.”
This doesn’t really sound like fair billing practices to me. But what do I know, I’m just a Fee Arbitrator for the Los Angeles County Bar Association’s Mandatory Fee Arbitration Program. Okay, well then let’s look to a higher authority, like say, the American Bar Association, for some guidance. Here are a couple of quotes from ABA Formal Opinion 93-379 on “Billing for Professional Fees, Disbursements and Other Expenses.”
“A lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures.” (Comment to Model Rule 1.5 on Reasonable Fees)
Moreover, continuous toil on or overstaffing a project for the purpose of churning out hours is also not considered “earning” one’s fees.
I’d say “random people working full time on random research projects” is a safe bet to fall under “wasteful procedures” and “churning out hours.”
But none of this is a surprise to anyone who spends any time seriously studying BigLaw dynamics. It is no secret that the modern top-heavy leverage model used by those firms has put clients at extraordinary risk for being overbilled. Mark Harris of Axiom Law recently and succinctly summarized that dynamic in “Law Firms and Overcharging: The System Itself is Rotten“:
Law firms are run by partners who have worked for decades to reap the rewards at the top of the pyramid. Any client-friendly change or investment in efficiency during their brief tenure at the top is self-destructive.
The legal industry must rid itself of its vestigial attachment to hourly billing and pyramid incentives, and its aversion to technology investment.
Well said, Mr. Harris. But surely DLA Piper is not built like one of those Ponzi schemes, is it? Well, according to The Lawyer, DLA Piper now has 461 equity partners (who in 2011 averaged $1.23 million in PPP) and another 3,575 billing machines, uh, I mean, other associates and non-equity partners. Which might explain the pressure to overbill, since DLA Piper PPP is actually lower than the AmLaw 100 average of 1.4 million! Come on Serfs, step it up, us Feudal Lords are suffering compared to our peers.
Lucky for me, the abused clients themselves are taking my side, right? Well, uh, kinda-not-really, um, okay, no. The only group apparently still in the dark when it comes to rampant BigLaw billing abuse are the victims themselves, the clients. The New York Law Journal followed up on DLA Piper’s public denial of any wrongdoing with this doozy: “‘Flippant’ Emails Won’t Affect Relationships, In-house Lawyers Say.” The level of naiveté of the GC responses was shocking to me. One stated that “ethical obligations should prevent lawyers from abusing billing practices.” Ya think? I’d say the odds of even being lightly reprimanded by a state bar association for billing abuse is somewhere in the ballpark of 1/1000th of a percentage point. Another minor point: firms aren’t subject to discipline, only individual attorneys, and the three involved in the DLA Piper emails are “surprise,” no longer with DLA Piper. Another GC notes that his company is protected by its “automated billing system.” “If you break those rules, your whole bill gets rejected,” he said. And then it gets resubmitted according to your “rules” and is paid in full. See here for ways to get around “stock” billing guidelines.
Which all brings me back to the beginning of this diatribe. Someone’s not telling the truth. Is it DLA Piper?:
While we will make no effort to defend the foolish emails generated by the lawyers involved in this matter, we will defend vigorously the firm’s track record of delivering high-quality legal services at a fair price.
Or is it me?
Absent hooking a DLA Piper partner up to a polygraph, the only other way I can see to conclusively decide this conundrum, is to get my hands on an actual DLA Piper bill, preferably from a litigation matter (I know, beggars shouldn’t be that choosy). I need just one client to provide me with a bill, and trust me, I will provide the world with some “actual excessive billing.” And if the bill is clean? Then I eat crow and need to change my blog title to “The Disgraced Lawyer.” Full and complete confidentiality guaranteed, of course. But, I’ll need the blogosphere’s help. Please spread this challenge far and wide so we can get to the bottom of this little brouhaha, once and for all.
Other posts in the “DLA Pipergate Series” are: