The Association of Corporate Counsel is challenging the apparent practice by at least some plaintiffs' firms of using temporary attorneys as profit centers in class actions as reported by Daniel Fisher for Forbes.
The 30,000-member professional association has filed a letter with a Manhattan federal court which must approve a $100 million fee request by trial lawyers who negotiated a $590 million settlement in a securities action against Citigroup, and contends that the high rates sought for the temporary lawyers are "beyond what a reasonable, paying client would be willing to pay."
In class action lawsuits a substantial portion of the attorneys' fees often are generated by billing out tempory lawyers from staffing agencies at substantially higher rates than they are paid for their typically perfunctory document review work.
The document review process generally involves both objective and subjective coding components. The objective component simply entails inputting bibliographical data from the document -- such as date, title, author, recipients -- onto a coding sheet or into a database, and the subjective component involves substantive analysis which includes issue spotting, determining relevancy, and providing comments for the document.
It is questionable whether temporary attorneys should be used for the objective coding of documents which seemingly is little more than clerical work. Indeed, some law firms outsource the objective coding portion of a document review to data entry service providers, and perhaps appropriately use the temporary lawyers with their much higher billing rates only for the subjective coding component; however, some plaintiffs' class action firms in many cases -- including Milberg LLP in In re Tyco International, Ltd. Securities Litigation which retained Adria Lopez and Brian Fortunato among others -- have used contract lawyers for both the objective and subjective coding portions of the document review.
Although the plaintiffs firms in the Citigroup case insist the contract attorneys did not engage in objective coding the nature of their work nevertheless does not warrant the high rates according to Ted Frank, the founder of the Center for Class Action Fairness, who has objected to the fee request pursuant to filings with the court dated December 20, 1012 and March 15, 2013 in which he alleges that amount sought is inflated by tens of millions "by overstating 'prevailing market rates' for contract attorneys doing document review."
The plaintiffs firms billed out the temp lawyers at "an average of $465 an hour on the case, and their work reflected more than half of the amount the plaintiffs submitted to support their request, according to court records," and "Frank told the judge the majority of corporate clients pay less than $70 an hour for temporary contract attorneys" as reported by Nate Raymond for Reuters.
08/01/13 UPDATE: A federal judge has slashed the $100 million fee request in the Citigroup case after citing, among other things, "significantly inflated" hourly rates for contract attorneys and "waste and inefficiency" in the work performed.
Further reading that may be of interest: