Attorney Fees

Expert in legal-fee fight blasts 'make believe' game over cost of contract lawyers to do doc review

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Even in the New York metropolitan area, the reasonable cost of hiring a contract lawyer from a staffing agency to do document review work in a securities class action case is, at most, $50 to $75 an hour, an expert said in a declaration (PDF) filed last month in federal court in Manhattan.

Hence, by trying to charge many times that amount for work done by contract attorneys in litigation against Citigroup Inc., the law firm that represented the plaintiffs, Kirby McInerney, is seeking a windfall profit, William Ruane contends. Ruane, a former in-house lawyer in charge of litigation at Wyeth Pharmaceuticals Inc., was retained as an expert in a fight over the legal fees in the case, which resulted in a $590 million verdict, the Am Law Litigation Daily reports.

Kirby McInerney is seeking $275 to $550 an hour for the work of such lawyers. The firm says that the upcharge represents, at least in part, the training and supervision it provided, the article continues. The amount reflects a “lodestar” approach in which reasonable hours for the work done are multiplied by a reasonable hourly rate for the lawyer.

In an interview several months ago with Forbes, partner Peter Linden of Kirby McInerney said the firm’s use of contract lawyers is customary in the industry, has been approved by numerous courts and makes the litigation more efficient.

“The law is pretty clear that contract attorneys are an essential part of modern law,” Linden said. “We train them, and we make sure there’s supervision.”

In an interview with Corporate Counsel, however, Ruane blasts the application of the lodestar approach to contract attorneys as a fantasy game in which the players “make believe” that the temporary lawyer is “the same as a $500 associate. That’s what the lodestar multiplier is really about,” Ruane says.

Ruane is working with attorney Theodore “Ted” Frank, a Citigroup shareholder and attorney with the Center for Class Action Fairness, in protesting the fee award sought by Kirby McInerney.

The Association of Corporate Counsel filed an amicus letter (PDF) in the case that also took issue with the attorney fees the law firm is seeking for contract lawyers, a Corporate Counsel article points out.

See also: “Does Legal Fees Motion in $590M Citigroup Case Include $1K Per Hour for Low-Paid Contract Lawyers?” “Law firm billing contract lawyers at $1K hourly must reveal what they were paid, federal judge says”

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