Saturday, March 30, 2013

A large law firm's internal emails boasting excessive hourly billing are discovered during a billing dispute

This was posted from ABA Journal Law News
March 25, 2013 by Martha Neil

Retained by energy entrepreneur Adam H. Victor in April 2010 to prepare the Chapter 11 filing for one of his companies, DLA Piper ran up a very large bill.

 Victor refused to pay it, so DLA Piper law firm sued him for $675,000. Victor defended aggressively, not only filing a counterclaim over what he alleged was a “sweeping practice of overbilling" on the megafirm's part but discovering some 250,000 pages of documents, according to the DealBook page of the New York Times.

Among the documents were copies of email in which lawyers, a number of whom no longer work for DLA Piper, lightheartedly discuss the rapidly growing bill for Victor's company, Project Orange Associates, which operated a Syracuse, N.Y., power plant, the article recounts.
The emails are included in a copy of an affidavit filed Thursday in the Manhattan Supreme Court case, to which a link is provided by the New York Times (reg. req.).

“I hear we are already 200k over our estimate—that’s Team DLA Piper!” wrote then-DLA Piper partner Erich P. Eisenegger in one email.

After another lawyer responded, noting that an attorney colleague, whose first name is Vince, had been added to the group working on the bankruptcy matter, then-DLA Piper attorney Christopher Thomson added his thoughts: “Now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode," wrote Thomson. “That bill shall know no limits.”
Eisenegger, who now works at another law firm, did not respond to a request for comment from the Times and Thomson, who works for the government, declined to comment.

A spokesman for DLA Piper told the newspaper initially that the law firm doesn't comment on pending litigation. However, they later released a statement saying that "the emails were in fact an offensive and inexcusable effort at humor, but in no way reflect actual excessive billing."

Victor's lawyer, Larry Hutcher of Davidoff Hutcher & Citron, amended the counterclaim against DLA Piper last week, adding a fraud claim and a request for $22.5 million in punitive damages.

The above illustrates why clients, large and small, are increasingly insisting on flat rate retainer agreements and on "value-based" billing.

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