Biglaw

Lawyer Accuses Former Firm Of Ripping Off Associates Through Creative Billing

Is this boss cheating employees? One lawsuit says yes.

By  
on
Are partners getting more than their fair share here?

Are partners getting more than their fair share here?

The Philadelphia legal world is reeling from a complaint filed against market bigshot Obermayer Rebmann Maxwell & Hippel for allegedly reallocating billing rates in a systematic effort to reduce associate access to bonuses.

Former Obermayer associate Ryan Leonard, now a principal with Dickie McCamey & Chilcote, filed the lawsuit claiming that Obermayer internally reduced associate billing rates and increased partner billing rates to shift the credited profitability of work more toward partners — a key allegation because he claims that Obermayer’s associate bonuses are based on their profitability. In other words, Leonard claims the firm billed out clients for associate work at higher and partner work at lower rates than they credited associates and partners with when it came time for bonuses. The deviations were allegedly extreme, with associate rates shifted downward from $170 to $88 per hour to bumping up a partner’s rate from $250 to $350.

Gina Passarella of The Legal Intelligencer reports on the allegations:

Leonard had worked at Obermayer Rebmann from 2008 until 2014, during which time he said he was told associate compensation was based largely on the associate’s profitability, which was calculated on a “pro-rated credit” basis. The associate’s billable hours were multiplied by the hourly rate, creating the pro-rated credit. If that figure was 2.5 times greater than the associate’s salary, the associate would receive a bonus, Leonard said in his complaint. The higher that pro-rated credit, the higher the bonus, he said.

“However, numerous partners at the firm, including partners on the management committee, engaged in a practice known as ‘reallocation of pro-rated credit,’” Leonard said in the complaint.

Leonard said he didn’t know about the practice until he saw internal documents outlining the method, contributing to his decision to leave the firm.

According to the complaint, Obermayer’s managing partner took the position that partners can adjust billing rates however they want and need not credit associates for the rates conveyed to clients.

No one is commenting on this story, but regardless of what’s really going on here, this case highlights the difficulties that can arise if firms walk away from the lockstep models of yesteryear and try to devise more complex compensation methods. Even if Leonard’s claims fail to pass legal muster, an approach like this runs a high risk of hurt feelings and mistrust and that’s never good for the workplace.

Sponsored

Ex-Obermayer Lawyer Accuses Partners of Short-Changing Associates [Legal Intelligencer]
Obermayer Bilked Associates Out Of Bonuses, Suit Claims [Law360]

Joe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

Sponsored

Bonus Time

Enter your email address to sign up for ATL's Bonus & Salary Increase Alerts.

Topics

, , , , , , , ,