Attorney integrity takes a hit: Disbarred for excessive client billing

This past week, the legal profession took some major publicity hits. Photo: Legal Bill

WASHINGTON, April 1, 2013 – This past week the legal profession took some major publicity hits, and the actions of some of its heretofore finest practitioners subjected my profession to humiliation while bolstering the negative rhetoric too often associated with attorneys.

The first example of negative lawyer publicity comes from a class action lawsuit against the manufacturer of the diet drug Fen-Phen that was filed in the 1990s and settled about ten years ago. Fen-Phen lawsuits continue today, alleging that the drug caused permanent heart problems and in some cases, death.


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Stanley Chesley, a 76-year old Ohio attorney known for his successes in large class action lawsuits (notably vs. tobacco companies; breast implant manufacturers; and Libya for the bombing of Pan Am flight 103 over Lockerbie, Scotland) became involved in one of those lawsuits. But his actions led to his being disbarred last week by the Kentucky Supreme Court. 

Because Ohio has reciprocity with Kentucky, that state will most likely take Chesley’s license as well.

The Plaintiffs’ attorneys in the Fen-Phen case hired Chesley for his expertise and guidance. He contracted with them for a flat fee equal to 21 percent of the global attorneys’ fees that would come from the case. The Plaintiffs’ attorneys had a contingency fee arrangement with their clients providing for payment of one-third of whatever amount was recovered. When a settlement of $200 million was reached, attorney’s fees should have been $66.6 million, and Chesley’s fee should have been $14 million. 

Instead, the clients received about $46 million. After paying the costs and expenses of the litigation that they fronted, the attorneys took the rest. Chesley took a fee of $20 million.


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Kentucky’s high court found that Mr. Chesley helped cover up misconduct to protect the improper payments that he accepted.

The Kentucky Supreme Court said Chesley’s $20 million fee “was unreasonable, especially in light of his professed ignorance and lack of responsibility for any aspect of the litigation except showing up at the mediation and going through the motions of announcing the agreement.”

Two of the attorneys in the case were convicted in 2009 on federal fraud charges related to the case, and they are serving prison sentences of 20 and 25 years.

Chesley , whose wife is a federal judge, was ordered to repay the excess fees he collected, about $7 million, but he was not charged with any crime.


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The Kentucky judge presiding over the case was disbarred for approving a settlement that the Kentucky high court said enriched lawyers, paralegals and consultants more than their clients.

The high court found that Judge Joseph “Jay” Bamberger didn’t request any details or documentation when he approved the deal that gave nearly half of the settlement money to three lawyers as attorney fees. Further, the court found that Bamberger personally benefited because he accepted a position as a paid director in a nonprofit corporation created in the settlement. Bamberger returned the approximately $48,000 he was paid in his new job after an ethics investigation began. He resigned from the bench in 2006.

The second example of bad publicity news for attorneys this past week involves virtually the same type of issue: money. Attorneys at the world’s largest law firm, DLA Piper, stand accused of excessive client billing. The firm sued Adam H. Victor, an energy industry executive for accumulating $675,000 in unpaid legal bills. Victor counter-sued, claiming the law firm had a “sweeping practice of overbilling.” E-mail evidence found in pre-trial “discovery” (required documentation disclosures) revealed that DLA Piper inflated bills by performing unnecessary tasks and assigning staff and attorneys to work on the case that was not needed.

Casual emails between attorneys at the firm about the case included a sarcastic joke about how the bill was running way over budget. Another described one attorney’s approach to an assignment as “churn that bill, baby!”  Still another email sent said that “I hear we are already 200k over our estimate – That’s Team DLA Piper!”

William G. Ross, a professor at Samford University’s Cumberland School of Law who specializes in billing ethics, said that the DLA Piper e-mails appeared to support what several of his studies had shown that churning, while not endemic, is an insidious problem in the legal profession.

The three attorneys who wrote the emails are no longer with the firm.

I have never practiced “big” law. In my 32 professional years I have worked for myself, and have come to know hundreds of other attorneys similarly situated, including some in bigger firms. In all this time, I have known of only two instances where attorneys clearly violated client’s interests. In both cases, those attorneys were disbarred. 

My practice involves taking a contingency fee, much like Chesley’s, (mine on a smaller scale), if and when I prevail in a case for my client. The administration of the funds is, and must be, transparent. Settlement or verdict funds come “in,” the client sees and endorses the check, and a disbursement sheet details what is to be paid “out,” which is always consistent with the contract between lawyer and client. 

Checks are then written to pay outstanding bills and to reimburse fronted costs and expenses, and the client is given a copy of those checks so the client can see what was paid and to whom.

While clearly it goes on, in one case, perhaps one similar to what was alleged to have occurred at DLA Piper, it’s hard to imagine overbilling a client as occurs in hourly billing scenarios. I do not bill on an hourly basis, and I’d probably under-bill out of concern that the client might complain. Actually, that is why I chose a contingency fee practice that makes 100% clear what my fee is and when I receive it.

Big firm life is a complete stranger to my practice. One frequently hears about the pressures on younger and junior attorneys who are striving to “move up” to make partner; to impress their superiors with their ability to produce; and score point by meeting or exceeding minimum billing requirements for each budget or accounting period. But these pressures do not justify overbilling.

It saddens me to see incidents, like those cited above, appear in the news and to learn that others in my profession who have taken an oath that mandates the highest level of honesty and integrity–which includes putting the client first–were not satisfied with adhering to the expected standards of our profession.

Most attorneys of my acquaintance are fine people, and adhere to the highest level of professional integrity. Yet in every profession, in every walk of life, there are those who yield to both significant and not-so-significant temptations. And sadly, as we’ve just seen, our profession is no exception.

Fortunately, the legal profession will survive the transgressions of the few that cross over the line. As in the above situations, it is encouraging that the legal system eventually finds out who they are and deals with them decisively.

 

Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980.  He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website. He is also available to speak to your group on numerous legal topics.  Paul is the featured legal analyst on the Washington Times Radio, in Washington, D.C., on the Andy Parks show, the featured legal analyst for America’s Radio News Network, heard in 165 markets nationwide, and he is a columnist on the Washington Times Communities.

His book The 8 Critical Things Your Auto Accident Attorney Won’t Tell You is free to Maryland and Virginia residents and can be obtained by ordering it on his website; others can obtain it on Amazon.

 


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Paul Samakow

Attorney Paul Samakow brings his legal expertise to the headlines from life and real-life experience to The Washington Times Communties. A native Washingtonian, Samakow has been a Plaintiff’s trial lawyer since 1980, with offices in Maryland and Virginia. 

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