by Brian Mahany
[Ed. Note: This post, and may just like it, appeared in our sister Guerilla Law Firm Blog. That site looks at the practice of law. It also explores the benefits in expertise and costs that law firm boutiques and virtual firms offer. Bookmark that site and visit often!]
There have been plenty of class action lawsuits filed in the wake of the 2008 financial crisis. Mortgage backed securities, toxic debt, mortgage defaults, credit default swaps, LIBOR fixing and even suits against rating agencies such as Standard & Poor’s. Just about every big law firm has their fingers in the pie. Some, however, may have become to greedy.
In 2007, a group of Citigroup shareholders sued the bank for allegedly hiding the truth about mortgage-backed securities. Kirby McInerney (KMLLP) was the firm hired by the investors. A well respected, well heeled firm that dates back to just after World War II, KMLLP has a history of successful big securities litigation.
The Citigroup case was ultimately settled for $590 million. For its work, the firm asked for a whopping fee of $100 million. One of the class members has now objected to the fee request. He claims that the firm marked up work by temporary workers by as much as 20 times.
According to a story published by law.com, some temporary workers were billed at $275 to $500 per hour. (If true, we can only imagine the hourly rate of associates and partners.) William Ruane, a former general counsel at Wyeth Pharmaceuticals, was quoted as saying the fees were “outrageous.”
Like us, Ruane believes the hourly rate model should be dead. “There are a lot of inefficiencies in the hourly billing system. And the whole trend for the past 10 years or longer for clients who pay for their own legal work is to reduce the cost of that,” said Ruane.
We believe that not only are hourly rates headed for extinction but so are the traditional BigLaw institutions that rely on those rates. Hourly billing is not efficient, does not reward great results and provides no incentives for firms to keep billings within reason.
Mahany & Ertl – America’s Tax and Litigation Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California.
If you want more information about us or what we can do, visit our Mahany & Ertl or better yet, give us a call. Managing partner Brian Mahany can be reached at or by telephone at (414) 704-6731 (direct).
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