Law firm DLA Piper has now settled an overbilling dispute with a dissatisfied client, while decrying “e-mail humor.” [NYT DealBook, earlier]
Although our system is (alas) set up to make it very difficult for defendants to recover legal fees from losing plaintiffs, it is not too surprising that this case would be an exception given a judge’s scathing findings against the plaintiffs’ conduct — not to mention the recent agreement by the ASPCA, one of the animal rights groups, to pay the Ringling owner $9.3 million. [ABA Journal]
Extraordinary emails bolster a client’s case that mega-law firm DLA Piper wasn’t holding its legal billings to a needed minimum. [New York Times "DealBook"]
We told you the Kentucky fen-phen scandal — which we’ve been covering since 2005 — was serious. Now it’s resulted in the permanent revocation of the Kentucky license to practice of famed “Master of Disaster” tort specialist Stanley Chesley, whose office is across the river in Cincinnati, Ohio. Two lawyers who directly represented fen-phen clients in Kentucky, “Shirley Cunningham Jr. and William Gallion, are serving prison sentences for bilking clients out of $94 million in settlement money.” While Chesley did not represent Cunningham’s or Gallion’s clients, and denied holding any legal responsibility toward them, he accepted a $20 million fee, far in excess of negotiated sums, for representing the lawyers themselves in the settlement that brought in the cash, a sum that “was unreasonable, especially in light of his professed ignorance and lack of responsibility for any aspect of the litigation except showing up at the mediation and going through the motions of announcing the agreement,” the Kentucky Supreme Court concluded. Chesley participated in the diversion of the pilfered funds into a trust (pleasantly named “Kentucky Fund for Healthy Living“) intended to conceal the skimming, and helped orchestrate the lawyers’ cover-up. Wrote the court: “The vast amount of evidence compiled and presented in this matter demonstrates convincingly that respondent knowingly participated in a scheme to skim millions of dollars in excess attorney’s fees from unknowing clients.” [ABA Journal; court order, PDF; Louisville Courier-Journal; Daniel Fisher, Forbes; David Lat, Above the Law]
“Four law firms that submitted a “grossly inflated” $2.7 million fee request after winning $12,500 for their client should go away empty-handed, a federal judge has ruled. Eastern District Judge Joanna Seybert, sitting in Central Islip, condemned the fee application submitted by real estate investor Robert Toussie’s attorneys, including $2.65 million for Chadbourne & Parke, as ‘outrageously excessive’ and done in ‘bad faith.’” [NYLJ]
“A federal judge in Philadelphia has done what every judge in a class action should do: She required each law firm involved in a $25 million antitrust settlement to document exactly how much time they spent on the case, and how much they expect to be paid for their work.” [Daniel Fisher, Forbes]
Peeking under the Hood, cont’d: Mississippi has finally passed sunshine legislation exposing to public scrutiny dealings of its attorney general with outside law firms, which can make large sums in contingency arrangements representing the state [Maggie Haberman, Politico] Not exactly unrelatedly, a Mississippi court has ruled that a settlement of the state’s case against MCI can’t funnel $14 million separately to private lawyers representing Hood on the theory that it was just a side payment and never represented public funds [YallPolitics, earlier on now-disbarred lead private lawyer in case]
“The Cook County Board on Tuesday agreed to pay more than $1 million in taxpayer money to settle a federal lawsuit brought by female County Jail inmates who said their civil rights were violated during repeated weekend lockdowns at the massive detention facility. The bulk of the settlement — $850,000 — will go to attorneys who represented the four inmates in the nine-year court case. Two inmates won federal judgments totaling $143,000, and the county opted to pay two others $5,000 to end the suit. … In addition to the $1 million settlement, the county spent at least $732,144 over the years to pay an outside firm to defend it against the suit, according to county records.” The plaintiffs had failed in a bid for class action status. [Chicago Tribune]
According to what seems to be the sense of many in the Florida legal profession, doctors and their patients should not have the right to enter enforceable arbitration agreements before the fact to resolve disputes, but lawyers and their clients should have the right to enter enforceable agreements before the fact to limit liability for excessive charging of legal fees. Thanks for clarifying! [White Coat, scroll; earlier]
Jenna Greene reports in the National Law Journal (reg) on the Judgment Fund, an obscure entity within the federal government that last year paid to settle more than 5,000 lawsuits against federal agencies. For the most part, its payouts are not subtracted from agency budgets, and overall dollar figures tend to be dominated by a few special situations such as (most recently) lawsuits by utilities over alleged Energy Department breach of contract for nuclear fuel storage, and by Indian tribes against the Department of the Interior and Department of Agriculture over financial mismanagement and alleged discrimination. A smaller, but controversial, category of payouts that has attracted Congressional attention consists of settlements with “cause” organizations such as environmentalists that sue to force policy change.
“The strange thing is the lack of transparency,” said Walter Olson, a senior fellow at the Cato Institute’s Center for Constitutional Studies. “Settlements deserve scrutiny.…There’s no reason why as a public process there shouldn’t be fine-grained disclosure.”
In April, Rep. Darrell Issa (R-Calif.) introduced the Judgment Fund Transparency Act of 2011, which would require Treasury (unless barred by a court order or law) to make public the names of plaintiffs and counsel, plus a brief description of the facts that gave rise to the payments and a breakdown of principal and attorney fees.
However, Greene reports, the Issa measure has attracted no co-sponsors and is stuck in House Judiciary with no apparent plans for action.
“Oil giant BP’s $20bn (£13bn) fund to compensate those hit by the Gulf of Mexico spill has been frozen, following a court order that all claimants must share the cost of the legal team leading the action over the disaster – whether or not they pursued their claim through the courts.” [Telegraph]
American legislatures since the 1970s have widely employed “one-way” fee provisions — under which courts award fees to prevailing plaintiffs, but not to prevailing defendants — as a way of encouraging plaintiffs and their lawyers to bring a maximum of legal action; especially when the fee shifts are generously calculated, such provisions also put strong pressure on defendants to settle potentially defensible cases rather than take the risk of a big fee award that may exceed the sums in controversy. Now Wisconsin lawmakers are thinking of making the playing field a bit more level by reining in one-way awards, especially those that exceed the underlying dispute; another way of approaching the issue, of course, would be to make the shifts two-way. [Rick Esenberg]
The New Jersey Supreme Court is being asked to review a case against a car dealer in which the plaintiff’s lawyer obtained a $99,000 fee award; the client’s actual recovery was $650, and the underlying disputed charge was $51.50. In a companion case, a complaint over inadequate handicapped parking won a $2,500 payout for the complainant and $74,000 for her lawyer. The cases could determine whether New Jersey retreats from a relatively liberal formula in which courts enhance many fee awards to prevailing plaintiffs above market rates. [New Jersey Law Journal]
As Gideon Kanner points out, you don’t need to be a property rights advocate to see the California Environmental Quality Act as a lawsuit-intensive mess (quoting Prof. Robert Freilich):
Many attorneys, planners, architects, engineers, scientists, developers, small businesses, business associations and governments in the state, and many environmentalists are agreed that CEQA needs major reform. Delays in the system are causing projects to suffer delays of 2 to 9 years to get EIRs approved, especially for (but not limited to) the failure to compare the project with all “feasible” alternatives, establish vague baseline analysis for existing mitigation, and the tricky determination as to which parts of regional, general and specific plan EIR findings can be incorporated, to eliminate duplication of effort and cost. The law is so confused on these points that it is a miracle that any EIR can survive its first round in the courts without a remand to do it over again. Complicating this result is the establishment of a specialized group of attorneys that initiate litigation at the drop of a hat, primarily because the statute authorizes attorney’s fees for any remand or reversal. Many community associations and no growth environmentalists use the EIR litigation process to delay and in many cases kill projects for little or no environmental substance.