In complex litigation, the lack of oversight in managing defense counsel, and the failure of defense counsel to follow billing guidelines, can result in overly inflated fees and costs from improper billing. Under either scenario, the result is generally excessive fees and costs.
Certain types of excessive billing practices are easy to spot, such as block and vague billing entries by counsel or billing for unrelated costs. Other excessive billing practices may be much harder to decipher and require closer scrutiny of the legal invoices. Improper staffing, with a revolving door of attorneys and paralegals, is one of the most common types of excessive billing practice that we come across in our litigation management work.
The different categories of improper staffing include general overstaffing, multiple attendance by timekeepers, excessive contract attorneys and paralegals, and transient billers.
In our litigation management practice, we have observed many instances of overstaffing. In some extreme cases there have been more than 170 professionals staffed on a case, including more than 30 attorneys and more than 80 paralegals. In addition, beyond full time attorneys and paralegals, overstaffing can include of counsel, “temporary attorneys,” law clerks, contract attorneys and paralegals. It is typically the case that all of these individuals are not necessary to effectively represent the interests of the client.
In some instances, cases are overstaffed by higher billing senior partners when associates could complete the same work at lower rates. For example, a vast majority of the discovery and law and motion practice can often be performed by associates, not partners.
Overstaffing ignores the economic realities of litigation and frequently results in the generation of excessive and unreasonable fees. Frequently, there is little or no benefit bestowed on the client by such inefficiencies, such as duplicate attendance by attorneys at meetings, conferences, hearings, depositions and trials. This is an issue which all clients should address in their billing standards.
Courts have been critical of overstaffing on cases. One of inhouse counsel’s most important duties is to ensure that cases are staffed in an efficient manner. This is especially important in large bet the company cases with multiple proceedings taking place at once.
Multiple Attendance by Attorneys – Conferences, Hearings and Depositions
Multiple attendance includes situations where numerous attorneys attend depositions, meetings, or court appearances. Courts reviewing the reasonableness of attorneys’ fees typically reduce bills where unnecessary duplication is brought about by having an excessive number of attorneys involved in proceedings. There has been reluctance by courts to permit an award of fees for multiple attorneys because in many instances such work appears to contribute more toward attorney training than toward representing the needs of the client.
The issue of multiple attorneys appearing at depositions and hearings is an especially sensitive one with both clients and courts. Most jurisdictions allow only one attorney to speak on behalf of a party, rendering all others little more than mere observers.
Transient Billers—Personnel with No Clear Utility to the Litigation
Frequent staff changes can result in unreasonable legal fees for clients. Too often, the sporadic participation of a new timekeeper results in little or no benefit to the case and may result in the billing of unnecessary fees. In prior audits, we have found instances where individuals with little or no active involvement in the litigation performed isolated tasks which bestowed questionable value to the case. Such individuals, frequently referred to as “transient” billers, may have no clear utility to the litigation.
“Transient” billers often inflate hourly bills because those newly assigned to a case must spend a substantial amount of time familiarizing themselves with the files and other aspects of the case. The cost of their “startup” time may far outweigh the benefit of their participation to the file. Unless supervising counsel is sensitive to these concerns, clients may incur unnecessary and unreasonable attorneys’ fees.
Over staffing a case with attorneys or paralegals, when a smaller number of attorneys can easily perform all of the legal work required, can generate excessive billing. As stated by the United States Supreme Court in Hensley v. Eckerhart, 461 US424, 434, “of course duplicative and excessive time not reasonably billed to one’s client, cannot be billed to an adversary through a fee shifting statute.” Following up on Hensley, the Court in Covel v. Payne Webber (N.D. Ill. 1989) 128 FRD 654, stated, “While we have refused to lay down a flat rule of one lawyer per case . . . the tendency of law firms to overstaff a case should cause the trial court to scrutinize a fee petition carefully for duplicative time . . . Too much double lawyering in a situation where one would have been sufficient . . . needlessly pyramid the time spent in keeping everyone up to speed, in crossconferencing and revisions of other lawyer’s work . . . ”
Contract Attorneys and Paralegals
We have conducted legal audits on cases where a veritable army of paralegals worked on a case, particularly in large document production litigation. Most of these paralegals worked on a contract basis and billed a significant amount of the hours, resulting in over 3,000 hours billed and over $2,000,000 in legal fees in a short time period.
A high amount of hours billed by contract attorneys and paralegals in comparison to the other attorneys and paralegals may suggest that these contract billers were compensated in a manner which encouraged billing the maximum number of hours possible daily. This can result in unreasonable fees.
In addition, many of these contract timekeepers may utilize repeatedly similar block billed or vague time entries for document review, database review, and drafting documents. It is very challenging to review these types of billing entries and decipher what actual work was conducted and whether this work was of value.
When cases are overstaffed, a significant percentage of the fees and costs may become unreasonable. Overstaffing can include multiple appearances by attorneys at single proceedings, transient timekeepers billing with no clear utility to the litigation, time for new attorneys to “get up to speed,” and excessive use of contract attorneys and paralegals. In order to curb many of the foregoing overstaffing abuses, we recommend the implementation of proactive litigation management whenever possible.