So that’s why they called this blog Greedy Associates. It’s all clear now. We never imagined that law firms would inflate bills, or stick unnecessary associates on cases for training or bill “churning” purposes.
The New York Times’ DealBook broke the “news” story: law firms inflate bills. More specifically, DLA Piper may have allegedly inflated the bills of a former client, Adam H. Victor. The client, who had a long-term relationship with the firm, hired them to handle one of his companies’ bankruptcies. The fee dispute became contentious, DLA Piper sued Mr. Victor, and he counter-claimed over the “sweeping practice of overbilling.”
Every lawyer that has ever practiced has had the unfortunate experience of an unsatisfied customer who thinks that their bill is too high. It's a fact of life. What these lawyers usually do not have, however, are smoking-gun emails floating around in e-discovery land, ready to nail them in court. Here are a couple glorious excerpts provided by the Times:
We left out, or omitted the parties' names, because quite frankly, there's a good chance that these guys were either venting or joking. Though they shouldn't have been careless enough to crack such jokes in company email (haven't we all heard a few e-discovery nightmares by now?) we're not going to condemn them as shysters or crooks.
The problem with BigLaw isn't bill-churning or the mentality that leads to the aforementioned emails (though both of those are problems). It's the broken fee structures and overpaid associates.
Seriously, we don't get it. Clients, like Mr. Victor, are sick of $160,000 associates being tacked onto cases, due to their high cost, low efficiency, and generally lower-quality work when compared to a senior partner.
Partners really do need to train associates -- after all, they don't want to dig through discovery or research minutiae on WestLaw at 3:00 a.m. Plus, occasionally, an associate becomes a rain-making contributor to the firm.
One of the attorneys on the email chain complained that the associates were incompetent and suggested paying more for better talent. What about reducing associate compensation? Pay 'em half as much and hire more of them. Churn talent rather than bills.
You can bill their time at half-rate, or do fixed-fee work, and clients won't mind their presence on cases nearly as much. Plus, since they will cost far less, there is less overhead to cover, and less of an investment in an associate that isn't pulling his or her weight. High salaries were a product of a time where there wasn't a buyer's market for entry-level legal talent.
Hire more, at less pay, and trim the fat frequently. Once they've survived a few rounds of cuts, then you can have them play substantial roles in cases.