Contract Lawyer Markups Turn Securities Suits into ATMs, Prof Says
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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