Lawyer Pay
Contract Lawyer Markups Turn Securities Suits into ATMs, Prof Says
Posted Jul 24, 2009 9:30 AM CST
By Debra Cassens Weiss
A law professor says markups on work done by contract lawyers are turning securities class actions into ATMs for plaintiffs firms.
Lester Brickman, a professor at Yeshiva University’s Benjamin N. Cardozo law school, says the plaintiffs firms devote more lawyer time to coding and classifying discovery evidence than do the defense side law firms. In a commentary for Forbes magazine, Brickman asserts that contract lawyers hired by the plaintiffs firms wade through the material, “document by document.”
In the Tyco securities litigation, for example, out of more than 423,000 lawyer hours claimed by plaintiffs lawyers, 69 percent of it was for work done by contract lawyers reviewing 83.5 million documents.
Contract lawyers are paid only $35 to $40 an hour, but the time is billed at $300 an hour, according to Brickman. Some firms add a multiplier to the number, raising the hourly charge to $450 to $1,000 an hour.
“Consider this class action math,” Brickman writes. “One contract lawyer working for 30 hours a week for 45 weeks per year can generate a profit for the class action law firm of about $1 million. Multiply that by hundreds of contract lawyers, and soon you are talking about real money.”
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Comments
John
Jul 24, 2009 9:49 AM CST
“Contract lawyers are paid only $35 to $40 an hour, but the time is billed at $300 an hour, according to Brickman.”
On the other hand, first year associates at big firms are paid only $50-$80 an hour, but the time is billed at $300 an hour. The only difference is the profit margin.
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Method Man
Jul 24, 2009 9:59 AM CST
C.R.E.A.M.
Cash Rules Everything Around Me. C.R.E.A.M. Get the money…Dollar…Dollar Bill…y’all!
—In re Method Man, 94 WuTang2d 100 (S.D.N.Y. 1994)
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tommy
Jul 24, 2009 10:26 AM CST
the going rate for doc review is 22 to 28 $ an hour. I just applied to several doc review gigs at that 22 to 25 rate, and I never even got a response. Too many lawyers applying for these positions these days. Wages are down because the supply is way way up.
The ABA is just shilling for the law school industry, trying to make contract doc review look lucrative.
The rates USED TO BE 35, but in the last few years the law schools have pumped out 100 THOUSAND excess lawyers, driving down wages for the working class lawyers.
The ABA is a wholly owned subsidiary of the law schools.
The law school staff and admins make millions scamming the law school students for that tuition….
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Rath
Jul 24, 2009 10:32 AM CST
John
That’s an extremely oversimplified analysis of compensation for first year associates. Besides base salary, you have to factor in the costs of employee benefits, unemployment insurance and malpractice insurance coverage, allocation of office support and office space costs and training as well as annual bonuses.
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B. McLeod
Jul 24, 2009 1:26 PM CST
First, I think lawyers working a securities case should wade through the material “document by document.” Nothing wrong with that.
As far as the markups, I never have agreed with firm “surcharges” (of which, this seems like just another example). This is just the executive version of charging a client 25 cents per page to copy an 80-page document draft because changes were marked on two pages. It is no worse than adding the “firm mark-up” to meals, hotel bills or airline tickets.
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Plaintiff's lawyer
Jul 24, 2009 2:32 PM CST
What a stupid biased study! Plaintiffs have the burden of proof - stands to reason that they are going to spend more time reviewing the potential evidence. And how is that any more of a “mark up” on contract lawyers’ time that what the defense firms charge. Is Lester a shill for BigLaw? Wouldn’t surprise me.
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anonymous
Jul 24, 2009 6:57 PM CST
1 million in profit off of me? To think that I have to scrounge for health insurance, am buried under a mountain of student loans, and live in a dirty rodent infested basement in queens. I guess the rich (law schools + firm partners) are getting richer and everyone else is getting poorer.
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B. McLeod
Jul 25, 2009 12:38 AM CST
@ 7, “Barrister”? Is that you?
Meep! Meep!
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df
Jul 25, 2009 2:10 AM CST
I agree with #5 B. McLeod (only this time! [grin]). I have real issues with (some) markups law firms do, in particular marking-up disbursements by ridiculous amounts. I’ve known some firms also to impose a surcharge (i.e. to the hourly billing rate) when using online services they pay a flat rate for which is ridiculous. I also happen to think that if one has document review done by non-lawyers (if you’re not admitted in the relevant jurisdiction, you’re not a lawyer) and reviewed by attorneys, the work done by the non-lawyers should properly be a disbursement not subject to the same billing/markups as “regular” lawyer employees.
Maybe if the work done by document reviewers was better I’d have less of a problem. Not to be a hypocrite, I’m currently doing some document review (on very good terms) along with other competent, professional lawyers. But I’ve worked in the past with people who shame the legal profession with the shoddy work they do. Sure, document review is usually boring, but either do a competent job - act like a real lawyer - or quit.
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Mac
Jul 27, 2009 12:44 PM CST
Ok, this professor doesn’t know what he’s talking about. His information is at least 5 years old. The rates are not $35-$40 an hour, the rates in most instances are below $30 an hour now. Also, clients caught on to the markup a long time ago, and now in most cases there is not a markup passed on to the client because clients insist costs be kept down and refuse to pay markups. And paralegals don’t do large doc reviews like this guy was saying, they do the small stuff and manage the contract attorneys on larger projects. And how projects are run varies case by case. Some firms are better about screening docs and only reviewing the seemingly relevent ones, but other firms just dump everything in a database and review everything. It is not a matter of trying to gouge the client, it is a matter of firm knoweldge and expertise of the proper way of doing doc reviews. Ultimately it is up to the client to set the guildelines for the project - what they want reviewed, what they want to pay, how its all to be done, etc.
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