Fee Suit Against Reed Smith Claims Bigger Isn’t Better
Posted Dec 4, 2007 6:35 AM CDT
By Debra Cassens Weiss
A religious nonprofit has sued Reed Smith alleging the firm engaged in inappropriate billing practices and charged excessive fees of nearly $1 million.
The Bair Foundation claims in its suit that Reed Smith overstaffed its defense of the foster care organization in a routine suit by two employees claiming religious discrimination, the Legal Intelligencer reports. The foundation's suit filed in Pennsylvania state court also claims the law firm failed to describe billing entries adequately and secretly hiked billing rates of lawyers on the case.
The law firm originally estimated legal fees in the case would be $50,000 but later submitted bills of more than $960,000, the suit claims. It also claims the firm committed legal malpractice by failing to quickly notify Bair’s insurer of the suit, causing the company to reject the claim initially, and failing to raise defenses such as the religious organization defense.
The suit says a smaller law firm would have been better suited to handle the case, something Reed Smith realized.
“In implementing its ambitious strategy of capturing global clients, which Reed Smith boasts results in 'a constant increase in revenue per partner,' it has acknowledged that comparatively small regional or local law firms can or perhaps should service smaller clients," the suit said. "This is so because such firms typically charge much lower fees than 'white shoe' international law firms like Reed Smith and are therefore more affordable to these smaller clients. However, Reed Smith has inexplicably continued to represent certain much smaller clients which lack substantial financial resources, such as Bair, a not-for-profit charitable foundation."
The law firm said in a statement that it has always provided competent and effective legal counsel to the foundation.
"The reality is that the foundation's insurance paid most of the legal fees in this case without question or complaint,” the firm’s lawyer, William Pietragallo, said in a statement. “Inevitably time allows the truth to surface. When it does, Reed Smith will prevail."