Friday, May 11, 2012

Congress Passes Bill to Extend Temporary Bankruptcy Judgeships

Congress sent a bill to the White House on Thursday that would extend 30 temporary federal bankruptcy judgeships for another five years, but Democrats fear an amendment attached to it could make it tougher to extend them again.

The bill, passed unanimously on Thursday, reauthorizes bankruptcy judgeships in 14 states and Puerto Rico that had already expired. Without the legislation, those districts would have lost a judgeship anytime a judge retired or left the bench for any reason, something that had already happened in two districts, including the spot for now-retired Judge Arthur Gonzalez in the U.S. District for the Southern District of New York.

“This legislation should help avoid that and provide some small degree of relief to overburdened bankruptcy courts around the country,” Sen. Patrick Leahy (D-Vt.) said. “Quite frankly, I think we should be doing more and hope we will continue to make sure the Federal Judiciary has the resources it needs to serve all Americans.”

In order to secure passage, however, Sen. Tom Coburn (R-Okla.) required an amendment that says the Administrative Office of the U.S. Courts would have to issue a report on the need for bankruptcy judges before the judgeships could be extended again, Leahy said.

Leahy said Sen. Chris Coons (D-Del.), the bill’s main proponent, worked with the AO and bankruptcy judges in a variety of districts to determine where need was greatest. “To codify an unenforceable mandate nominally imposed on future Congresses is unnecessary and unwise,” Leahy said on the Senate floor.

The Senate first passed the bill in April, but there was a technical error and it had to be corrected and passed again Thursday.

Coons said this would “prevent a genuine crisis in America’s bankruptcy court system.” But judges cost money, and the $16 million price tag had been the main obstacle for the Senate amid overall efforts to reel in the national debt.

To get unanimous support, the Senate passed a version of a House bill that would extend the 29 temporary judgeships for another five years but first tacked $167 onto the current $1,000 bankruptcy filing fees.

In 2005, Congress added 28 temporary bankruptcy judgeships at the same time it made sweeping changes with the Bankruptcy Abuse Prevention and Consumer Protection Act, which also calls on those judges to do more to prevent bankruptcy fraud. As of Oct. 31 of last year, there were 338 bankruptcy judges on the bench nationwide in 90 geographic districts to handle six types of bankruptcy filings, including consumer and business filings under Chapter 7, reorganization filings under Chapter 11 and debt repayment under Chapter 13.

Posted by Todd Ruger at 12:17 PM.

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Tuesday, May 1, 2012

In Courtroom Pitching Duel, Andy Pettitte Testifies in Roger Clemens Trial

Two elite Major League Baseball pitchers were pitted against each other in a federal courtroom Tuesday, as Andy Pettitte told a jury that he first learned about a performance-enhancing drug called human growth hormone when Roger Clemens admitted to using it.

The afternoon was some of the most emotional testimony in the high-profile perjury and obstruction prosecution of seven-time Cy Young Award-winner Clemens, who is accused of lying to Congress when he denied using performance enhancing drugs at a 2008 oversight hearing.

When prosecutors asked why testifying in the case against his baseball idol and former teammate and training partner was so difficult, Pettitte could only muster: “Cause… good friend.”

Pettite’s testimony was some of the most important and trickiest for federal prosecutors, who are trying to connect Clemens to his former strength trainer but avoid another mistrial. Clemens’ first trial in 2011 was cut short when the jury heard evidence that was supposed to be excluded.

On Tuesday, Pettitte testified about using the drug HGH in 2002 and 2004 to deal with injuries, but was prohibited from speaking about where he got them. Assistant U.S. attorney Steven Durham danced around with questions that often began, “Without saying names…”

Pettitte is key to the prosecution’s case because he acquired HGH from Brian McNamee, Clemens’ former strength trainer. McNamee is the central government witness, and is expected to testify that he injected Clemens with performance enhancing drugs.

To show how close the two pitchers were, Durham showed the jury photos of Clemens and Pettitte jogging together in a baseball park's outfield, standing next to each other in a dugout during a game, and standing next to each other during the national anthem.

Then Durham showed photos of McNamee, Pettitte and Clemens working out together during the off-season. Pettitte told the jury during one of those workout sessions that Clemens told him about using HGH.

“Roger had mentioned to me that he had taken HGH and it could help with recovery. That’s really all I remember about the conversation,” Pettitte testified.

Later, Pettitte recalled approaching Clemens in a Florida spring training clubhouse in 2005 and asking what Clemens planned to do if the media asked him about using performance-enhancing drugs, since there were congressional hearings about the topic and a growing public interest.

“My concern in my mind was, I knew I was very approachable by the media, I knew I had already taken HGH and I was concerned with what I was going to say if the media approached me with that question,” Pettitte testified.

“He just said, ‘What are you talking about?’” Pettitte said. “I said, ‘Didn’t you tell me that, you used it?' ” He said Clemens told him, “I didn’t tell you that, I told you my wife Debbie used it.”

“Obviously, I was a little flustered because I thought he told me that he did,” Pettitte said. “I thought, it’s no good asking him or talking to him about this now and walked out.”

Did they argue? “There was nothing to argue about,” Pettitte said. “He said he didn’t use it.”

In cross examination, one of Clemens’ attorneys, Mike Attanasio, focused on how Pettitte was probably the best person to talk about Clemens as a legendary pitcher and as a teammate, including his incredible work ethic and dedication to studying opposing batters and umpires.

Pettitte agreed that Clemens’ body and pitching mechanics never changed over the years, and that he was always “country big” instead of “weightroom big.” Pettitte denied that there was any time he saw Clemens – either dressed or undressed in the shower, as Attanasio put it – that he suspected Clemens was on performance-enhancing drugs.
And Clemens struck out batters using a sinking pitch he developed called a “splitter,” and not a faster fast ball, as his career went on.

“Did he ever once tell you or suggest to you that you personally should use HGH or steroids?” Attanasio asked.

“No,” was Pettitte’s reply.
 

Posted by Todd Ruger at 05:10 PM.

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Monday, April 16, 2012

When It Comes to Billing, Latest Rate Report Shows the Rich Keep Getting Richer

Hourly rates just keep rising—and the best-paid lawyers are raising their rates faster than everyone else.

Those are two of the key findings contained in the 2012 Real Rate Report, an analysis of $7.6 billion in legal bills paid by corporations over a five-year period ending in December 2011. The report, released Monday, is the second such collaboration between TyMetrix, a company that manages and audits legal bills for corporate legal departments, and the Corporate Executive Board.

Many of the new rate report's findings echo those contained in the 2010 study, including the fact that rates keep going up, almost across the board, and that the cost of a given matter can vary dramatically depending on a law firm's size and location and its relationship with a particular client.

At the same time, this year's study shows that the legal sector is becoming increasingly bifurcated, with top firms raising rates faster than those at the bottom of the market and large firms charging a premium price based purely on their size.

"What it's really showing is that there's an increased premium being paid for experience and expertise," says Julie Peck, vice president of strategy and market development at TyMetrix. "Some parts of the lawyer market are able to raise rates much more quickly, and are more impervious to economic forces then others."

To compile the current rate report, TyMetrix received permission from its clients to examine legal fees billed to 62 companies across 17 industries including energy, finance, retail, technology, insurance, and health care. The bills, which represent the amount actually paid by the companies in question rather than the amount initially charged, came from more than 4,000 firms in 84 metropolitan areas around the country. Every firm on the 2011 Am Law 100 is represented in the data.

The report's key data points include:

A Widening Gap: Hourly rates charged by lawyers in the legal sector's upper echelon grew faster between 2009 and 2011 than those charged by lawyers toiling on the lower rungs. Particularly striking was the jump in associate rates billed by those falling in the report's top quartile: 18 percent on average, to just over $600 per hour. Rates billed by top quartile partners, meanwhile, rose 8 percent, to just under just under $900 per hour. In the bottom quartile, associate rates rose 4 percent and partner rates rose 3 percent during the same period.

The Recession's (Minor) Toll: Even amid the economic downturn, the cost of an hour of a lawyer's time continued to rise faster than key measures of inflation. That said, the legal industry wasn't completely immune to the broader economy's slowdown. After rising 8.2 percent between 2007 and 2008, hourly rates rose just 2.3 percent in 2009. Law firms bounced back a bit last year, with rates climbing 5.1 percent, to an average of $530 an hour.

Location Counts: Not surprisingly, lawyers working in major metropolitan areas—where, as the rate report notes, rents are typically higher—are the priciest. An address in Boston, Chicago, Los Angeles, San Francisco, or Washington, D.C., alone adds about $161 to the hourly rate charged by an individual lawyer. Those six cities and Baltimore, Houston, Philadelphia, and San Jose are the ten U.S. markets with the highest hourly rates. With an average partner rate topping $700 per hour and average associate rate of more than $450 per hour, New York is the most expensive market in the country. The least expensive? Riverside, California, where the average partner bills at under $250 per hour and associates bill at just over $300 an hour.

In the Minority: A small group of lawyers—12 percent—bucked the trend toward higher fees and actually lowered rates between 2009 to 2011—and 3 percent trimmed rates by $50 or more per hour. (Most of those in the rate-cutting camp were based outside the big six markets identified above.) At the other end of the spectrum, 52 percent of lawyers increased rates by between $25 and $200 or more per hour. Another 18 percent increased rates by less than $25 per hour, and the final 18 percent held rates steady.

First-Year Blues: Even before the recession hit, clients balked at paying for what they considered on-the-job training for first-year associates. The latest rate report is likely to reinforce that reluctance, given its finding that using entry-level lawyers adds as much as 20 percent to the cost of a legal matter. The report offers evidence that firms may be accommodating clients on this front: The percentage of bills attributed to entry-level associates dropped from 7 percent in 2009 to 2.9 percent last year.

Ties That Bind: The more work one firm handles for a client—and the longer the client relationship extends—the higher the average rate the firm charges. For companies that paid one firm $10 million or more in a single year, the average hourly rate paid was $553 in 2011. By comparison, clients that limited their spending on an individual firm to $500,000 paid that firm an average of $319 per hour.

Four-Digit Frontier: Data has consistently shown that many lawyers hesitate to charge more than $1,000 an hour, and in 2011 just under 3 percent of the lawyers covered by the rate report had broken that barrier. Of those, the vast majority were working in the six main legal markets identified above and 60 percent of the time, they billed in increments of one hour or less.

Playing Favorites: Across all practice areas, 90 percent of lawyers charged different clients different rates for similar types of work. (The figure for mergers and acquisitions lawyers was 100 percent.) The differences from client to client can be extreme, and were even more pronounced in the current report than in the 2010 edition. Rates charged by intellectual property specialists, for instance, had a median variance of 23.1 percent, while lawyers doing commercial and contract work showed a 18.7 percent median difference.

Who's Doing What? A closer look at law firm bills for work performed on litigation and intellectual property assignments shows that the kind of timekeeper billing on a matter varies by practice type. On patent matters, the report shows, 47 percent of hours billed on average are attributed to paralegals, and 37 percent by partners. By comparison, paralegals account for just 8 percent of the work done on labor and employment litigation hours, while partners handle 45 percent.

Posted by Sara Randazzo at 05:20 PM.

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Wednesday, April 11, 2012

DOJ Antitrust Suit Alleges Apple and E-Book Publishers Fixed Prices

The Justice Department filed an antitrust suit today against Apple Inc. and a handful of publishers, alleging the companies conspired to drive up prices for e-books.

In the complaint, filed in U.S. District Court for the Southern District of New York, prosecutors allege that Apple colluded with Hachette Book Group, HarperCollins Publishers, Macmillan, The Penguin Group, and Simon & Schuster to raise the price of e-books in response to Amazon's practice of offering $9.99 electronic copies of new releases and bestsellers on its Kindle platform.

"Publishers saw the rise in e-books, and particularly Amazon's price discounting, as a substantial challenge to their traditional business model," reads the complaint. "The Publisher Defendants feared that lower retail prices for e-books might lead eventually to lower wholesale prices for e-books, lower prices for print books, or other consequences the publishers hoped to avoid."

At least 13 DOJ attorneys were involved in the drafting of the complaint. The lead agency official was Sharis Pozen, acting assistant attorney general for antitrust matters.

After "unilateral efforts" to steer Amazon away from the discount offerings, the complaint states, the publishers enlisted Apple in late 2009, which was gearing up for the launch of the iPad and considering whether or not to sell e-books for the device.

Following negotiations, prosecutors allege, Apple would sell e-books as an agent of the publishers rather than a traditional wholesaler, giving up its ability to set the retail price in exchange for a 30 percent commission on each copy sold. The publishers then allegedly set up similar agency agreements with all other retailers, giving the publishers the power to limit retail price competition among themselves.

"As a direct result, those retailers lost their ability to compete on price, including their ability to sell the most popular e-books for $9.99 or for other low prices," the complaint states.

A spokesperson for Apple could not immediately be reached for comment.

According to a Bloomberg report citing anonymous sources, Simon & Schuster, Hachette and HarperCollins settled their suits today.

Simon & Schuster Senior Vice President for Corporate Communications Adam Rothberg confirmed that the publisher filed a settlement in the case this morning. A HarperCollins statement confirmed that they also have settled.

U.S. Attorney General Eric Holder Jr. and Pozen are holding a press conference at noon today on a "[s]ignificant antitrust matter," which likely is connected to the Apple suit.

Posted by Rob Stigile at 12:13 PM.

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Friday, April 6, 2012

Legal Sector Shed 1,300 Jobs in March

After gaining jobs for two straight months, the legal sector lost 1,300 positions in March, according to preliminary data released Friday by the U.S. Bureau of Labor Statistics.

Friday's report recorded 1,116,400 legal sector positions last month, down from the 18-month high the industry hit in February. The bureau's revised data also showed that the legal sector gained 1,900 jobs in January rather than the 1,000 originally estimated.

The latest figures aside, the legal industry continues to employ far fewer people than it did prior to the recession, when it was common for the bureau to record 1,180,000 legal employees in a given month.

The broader U.S. economy gained 120,000 jobs in March, according to the data released Friday. The nation's unemployment rate dropped to a three-year low of 8.2 percent from February's 8.3 percent. Analysts interviewed by The New York Times labeled the jobs data disappointing given expectations that March would be the fourth consecutive month of "solid employment growth."

Friday's report is the second dose of bad employment news for the legal sector in recent days.

In a March 29 report examining the job outlook for the industry, the Bureau of Labor Statistics predicted that the number of lawyers practicing in the country will grow 10 percent between 2010 and 2020—from 728,000 to 801,800.

At the same time, the report said, "growth in demand for lawyers will be constrained as businesses increasingly use large accounting firms and paralegals to do some of the same tasks that lawyers do." The report estimated that overall legal sector employment will increase 11 percent by 2020, and that paralegal and legal assistant jobs will surge 18 percent.

The report, which the ABA Journal reported on Thursday, cautions that the number of law school graduates continues to outpace the anticipated growth in jobs. The most recently available data from the American Bar Association pegs the number of law school grads for 2010 at 44,000.

The March 29 report prompted William Henderson, an Indiana University School of Law professor who studies the business of law, to author a blog post containing three suggestions for how to curb the overproduction of lawyers.

Henderson's ideas include having the Education Department curtail federal funding for law student loans, reducing prospective students' interest in applying to law school through new regulations requiring law schools to release more reliable post-graduation employment statistics, and improving the versatility of law degrees to make graduates more competitive for jobs outside the industry.

Posted by Sara Randazzo at 02:56 PM.

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