According to the Wall Street Journal, law firm Kirby McInerney is billing its clients $550 an hour for contract lawyers who sorted through documents, despite sources claiming the firm only paid $60 to $75 an hour for the work.
‘Bloated billing’
Ted Frank, a litigator who often objects to class-action settlements, claims that the requested share – a reported 16.5 per cent of the $590m settlement – is based on ‘bloated billing’ of routine legal work.
The report suggests that although law firms are increasingly relying on contract lawyers to assist them during the discovery phase of litigation in order to save money, the savings are not passed onto the client.
A nonbinding ethics opinion issued in 2000 by the American Bar Association - which cited similar opinions by bar groups in Virginia, Colorado and the District of Columbia – deemed that the ‘mark-ups’ are permitted as long as the total fee remains ‘reasonable’ and the contract lawyers' work is charged to the client as a fee for legal services rather than an expense.
Contract attorneys
Kirby McInerney partner Ira Press told the WSJ that the ‘mark-up’ was not ‘unusual or untoward’ but is to ‘cover overhead and have a profit built in’.
However Mr Frank argued at a hearing on the fee request last week in Manhattan that much of the contract work required no special expertise, claiming that firms are artificially increasing fees.
Mr Frank said: ‘We have not heard from a single paying client in the New York area who pays $500 an hour for contract attorneys.’
A ruling on the settlement is expected in coming weeks.
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