eDiscovery Daily Blog

Judge Cuts Over $10M from Attorney Fees Due to Use of Temporary Attorneys for Document Review: eDiscovery Case Law

The use of temporary associates for document review (and billing at normal staff associate rates) caused a federal judge in Manhattan to reduce the request for attorney fees by $10.3 million in a settlement of a securities case against Bank of America.

According to The New York Law Journal (Judge Slashes $10M in Fees Over Firm’s Use of Temporary Associates, written by Scott Flaherty), while Southern District Judge William Pauley III signed off on a $335 million settlement between Bank of America and a certified class of investors, he questioned the request for $51.6 million in fees by plaintiffs lawyers at Pennsylvania-based Barrack, Rodos & Bacine.  One of Judge Pauley’s primary issues with the request was “the use of temporary associates for the bulk of document discovery at standard associate hourly rates”.

While acknowledging that the use of less-costly associates or temporary contract attorneys “is common practice”, Judge Pauley stated that he found “troublesome” the “practice of ‘gear[ing] up’ for discovery by hiring a large group of temporary ‘associates’ and billing them at the firm’s standard rates for what this Court must assume was first-cut document review.”  Barrack had hired sixteen temporary attorneys in 2013 and 2014 to work exclusively on the matter at a blended rate of $362.50 per hour.

Even though the attorneys were “full-time [Barrack] associate attorneys” who were eligible to participate in the firm’s health insurance and 401(k) plans, they had all since left the firm.  Judge Pauley observed that “hiring a group of temporary associates and billing them out at more than $350 per hour for work that is typically the domain of contract attorneys or paralegals seems excessive.”  As a result, he concluded “that a reduction in the requested fees is warranted to avoid a windfall to Barrack for charging more than $350 per hour for associates who are contract attorneys in all but name, while simultaneously overstaffing the substantive legal work with high-priced partners.”

Judge Pauley determined that “the simplest resolution is to reduce the lodestar multiplier from 1.5 to 1.2, resulting in attorneys’ fees of $41,340,835.80, or 12 percent of the Fund.”

The New York Law Journal provided a link to the ruling here.

So, what do you think?  Should law firms bill full associate rates for document review?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

print