by Brian Mahany
A shocking 78-page complaint filed in a San Francisco federal court last week opens a rare window into the inner workings of some law firms. Like that old adage about watching sausage being made, the plaintiff does not paint a pretty picture. From excessive billing practices to conflicts of interest and false marketing claims, attorney Jon King has much to say about his former employer, Hausfeld LLP, a prominent class action firm.
Jon King is a former partner of Hausfeld LLP, a national class action boutique with offices in Washington DC, London and San Francisco. After being fired, allegedly for being a whistleblower, King decided to fight back and sue his former employer. Quoting from the complaint, he says about his former firm “[i]n the quest to be rapidly retained by corporate clients, all vestiges of ethics and morality were cast aside.”
King claims he was fired when he called these ethical breaches to the attention of management. If that isn’t bad enough, firm founder Michael Hausfeld allegedly offered to pay King hush money and not discuss his concerns with others.
Is this just a case of a pissed off former employee seeking revenge? Maybe. But the level of details contained in the complaint does call into question the firm’s ethics. His complaint also cites numerous personnel evaluation and performance reports, all of which are uniformly positive. In other words, King was apparently a good lawyer right up until the time he was fired.
So what was going on at the firm?
King reports in one case there was “overstaffing resulting in massive inefficiency and a stunning amount of attorney time being spent on the case.”
He also quotes the firm’s marketing materials that tout the high ethical standards of the firm and strong stand policy against conflicts of interest. Apparently, those policies were merely for show. King’s complaint cites numerous instances of conflicts. In another instance, he states that Michael Hausfeld instructed certain attorneys to prepare false billing records.
If all of this isn’t bad enough, King suggests that other firms also had serious conflicts. One of those firms is Venable LLP, a well-known Washington DC firm. [Ed. Note: Conflicts can be sometimes waived; there is nothing in King’s complaint that suggests whether Venable violated any professional conduct rules.]
King doesn’t appear to be alone in his complaints. Former NFL quarterback Dante “Dan” Pastorini recently sued Hausfeld for legal malpractice.
Assuming that the allegations are true or mostly true, why would a firm engage in such conduct? The answer is easy. Money.
King says the firm was burdened with big bills and expensive office space. We see that all the time with the so-called “silk stocking” firms. All those outward trappings of success cost money, however. As expenses mount, firms are left with just two choices. Cut expenses or increase revenues. Many firms don’t like to cut back. Too many years of fat living makes some lawyers arrogant.
If expenses aren’t cut, revenues must increase. Some firms increase revenues through better marketing and increasing the quality of their services. Other do it through fraudulent billing practices, taking cases where clear conflicts of interest exist and pushing younger lawyers to bill more hours.
We recently reviewed documents last week in a malpractice case where a partner questioned whether certain work needed to be done for the client. The response was quite telling, “no, the work probably doesn’t need to be done but it’s billable so do it.”
Some people equate legal malpractice with missing a court deadline or stealing trust funds. We believe that sloppy ethics and billing fraud are just as bad.
Finding a lawyer to sue another law firm can be difficult; particularly if the firm is large or well known. That’s never a problem for us. The fraud lawyers at Mahany & Ertl specialize in legal and accounting malpractice.
If you have been victimized by poor lawyering, false billing or any other type if fraud, give us a call. Most cases can be handles on a contingent fee basis meaning no legal fees unless we collect money for you. Please note that generally we limit our malpractice cases to those cases where the minimum loss is $250,000 or greater, unless the case is located near one of our several offices.
For more information, contact attorney Brian Mahany at . Have an immediate problem? Brian can be reached at (414) 704-6731 (direct). All inquiries are kept in strict confidence and protected by the attorney – client privilege.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Services available in many jurisdictions.
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