Posted Jul 11, 2012 10:29 am CDT
Updated: Arizona’s Maricopa County says it has identified 299 billing errors by its former law firm Ogletree, Deakins, Nash, Smoak and Stewart—and they may be “only the tip of the iceberg.”
In a proposed second amended complaint filed on Monday, the county detailed the alleged 299 billing errors by the law firm, up from 36 errors alleged in an earlier version of the suit. The county also complains that Ogletree failed to cooperate in an audit, used subcontractor law firms that didn’t conform to the county contract, and billed for unapproved services such as issuing media statements.
The largest number of alleged billing errors—227 in all—were due to Ogletree misclassifying 11 lawyers at higher experience levels than authorized by the contract, the proposed amended complaint says.
A June 2010 contract specified rates for associates, senior associates, partners and senior partners, and set the minimum years of experience necessary for each category, the county says. Permitted rates ranged from $125 an hour for associates with a minimum of one year of experience to $250 an hour for senior partners with at least 12 years of experience. A prior contract allowed the law firm to charge $275 an hour for all attorney services.
In some instances, Ogletree billed associates as partners and even senior partners, the proposed complaint says. The mistakes were “so extensive, so frequent, and so systemic that the conclusion is inescapable that when the county implemented lower billing rates for attorneys on June 1, 2010, Ogletree’s Phoenix and national management made the decision to overcharge the county and thereby to lessen the effects upon Ogletree of the county’s new, reduced billing rate structure,” the county alleges.
The proposed complaint claims breach of contract, breach of fiduciary duty and fraud. It seeks class action status based on the claim that Ogletree improperly bills other public sector clients by classifying law graduates as associates even though they have have not yet passed the bar.
The court document alleges 37 instances of billing two nonattorney law grads as associates, despite a contract ban on such a practice. The suit also claims 35 instances of billing for 11 specialists such as librarians and information technology specialists. The firm is allowed to bill only for lawyers and paralegals, the county says.
The county claims the errors involve excessive charges of more than $300,000. Ogletree, on the other hand, claims the county owes nearly $1 million dollars in unpaid legal bills.
So far, Ogletree has agreed to refund $78,000 for billing errors, according to Maricopa County communications director Cari Gerchick. The county is seeking to debar the firm from contracting work with the county for three years.
A lawyer representing Ogletree in the litigation, John Doran of Sherman & Howard in Phoenix, says the dispute is over the contract interpretation. “There are not 299 billing errors or anything close to that number,” he tells the ABA Journal in an email.
Doran says there were a few instances where it was debatable whether Ogletree could bill law grads as associates under the contract, and Ogletree reimbursed the county for those time entries. “The vast majority of the remaining time entries alluded to by the county consist of contract interpretation questions, not demonstrated billing errors,” Doran says.
He points to one example involving billing entries for an of counsel lawyer who had enough years of experience to qualify for the billing rate charged. “But the county is improperly and semantically focusing on his title as ‘of counsel’ rather than his years of service to argue that Ogletree could not bill his time at all, let alone bill at the contractual rate,” Doran says. “Virtually all of the challenged time entries are of this ilk. It is also important to note that all of the work Ogletree billed for was performed at the highest level, and nobody has ever suggested otherwise. We would also be remiss were we not to mention the fact that the county has not even paid Ogletree for virtually all of these time entries, so their claim is difficult to understand in any event.”
ABAJournal.com: “Should Law Grads Be Billed as Associates Before Passing Bar? Issue Raised in Ogletree Suit”
Updated on July 12 to include the statement by John Doran.