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Amtrak may not be making money, but its lawyers sure are. According to a report last week by the Amtrak Office of Inspector General and the U.S. Department of Transportation Office of Inspector General, the government-subsidized rail system mismanaged more than $100 million in legal bills paid to law firms. The probe, which was requested by the House Transportation and Infrastructure Committee, found that between June 2002 and June 2005, 10 firms billed Amtrak more than $40 million for litigation work. The three largest bills came from Landman Corsi Ballaine & Ford ($11.6 million), Manatt, Phelps & Phillips ($7.4 million), and DLA Piper ($4.1 million). None of those firms returned calls. According to the report released on Oct. 25, the law firms’ billing rates were “generally high,” including charging more than $450 per hour for an eighth-year associate in 2002 and $575 per hour for a partner in 2004. The report also found that Amtrak’s in-house law department allowed firms to use block billing, which puts multiple tasks under one entry in an invoice; did not require receipts from outside counsel for firms to be reimbursed by Amtrak; and did not perform audits of outside counsel. John Toothman, who helped review Amtrak’s use of outside counsel, says the train operator’s legal department did not negotiate the usual government discount on legal services or check to make sure its bills reflected discounts. “The law department didn’t view itself as being the champion, the professional fiduciary, of its client, which is Amtrak,” says Toothman, founder of the legal-fee management firm the Devil’s Advocate. “They were more defensive of outside law firms that they were supposed to be managing.” Amtrak’s legal department, headed by general counsel Alicia Serfaty, responded to the report saying Amtrak actually reduced legal fees from $31 million to $24 million over the period. Toothman says that critique doesn’t wash. “They had a large case that settled, and that’s why their expenses went down.” It doesn’t look like Amtrak is going to be off the hook any time soon. “The committee is continuing and expanding its investigation,” says Steve Hansen, a spokesman for the House committee. Anna Palmer can be contacted at [email protected]

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