Moral of this story — never treat a temporary attorney like a real, live associate, or at least don’t bill them out that way.
Well, before we get into the editorializing, let’s go through the facts of the case, as reported by the New York Law Journal. There’s a class action between Bank of America and a class of investors that is now settling. Seems standard enough. Judge William Pauley (S.D.N.Y.) even approved the $335 million settlement, so open and shut case, right? Not so fast. The plaintiff’s firm, Barrack, Rodos & Bacine, had their request for fees cut by $10 million, because they hired temp attorneys to assist with discovery — and billed them at the same rate as their full-time associates:
“Hiring a group of temporary associates and billing them out at more than $350 per hour for work that is typically the domain of contract attorneys or paralegals seems excessive,” the judge wrote Dec. 27.
Barrack had hired 16 lawyers in 2013 and 2014 to work exclusively on the Bank of America case, according to Pauley. While the firm hired those lawyers as full-time associates, and offered for them to take part in the firm’s health and retirement plans, the judge said that none of the lawyers has remained with the firm. As a group, the lawyers stayed with Barrack for an average of about a year, although at least a few of them stayed for just one month.
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Now, it’s unclear if they are getting paid the same as the “real” associates, if these attorneys ever had an opportunity to work on other matters (and if so how they were billed out for them), or if the “full-time” designation given those hired to work on the case was an empty gesture. At first blush it appears as though the markup from the amount of money contract attorneys get paid to the $350 the firm is asking for their work now is what’s really sticking in Judge Pauley’s craw. But then he goes on:
“Delegating the legwork of complex litigation (such as routine document review) to less-costly associates or temporary contract attorneys is common practice, and it is not this court’s place to dictate law firm structure or workflow,” the judge wrote. “What is troublesome, however, is Barrack’s practice of ‘gear[ing] up’ for discovery by hiring a large group of temporary ‘associates’ and billing them at the firm’s standard rates for what this court must assume was first-cut document review.”
Um, why, exactly does he assume the work done by the temps was first-pass work? And why is that a bad thing? Just because necessary, though often tedious, work is done by a temp attorney doesn’t mean it is less valuable than if a “real” associate did it. And here’s the additional rub — lots of the time, temporary attorneys are doing much more substantive work than first-pass review. There’s a lot of talent and experience in the temporary attorney pool, and savvy firms (and clients) are taking advantage of that. Contract attorneys can work on chronologies, “hot doc” lists, privilege logs, deposition prep and more. (And that’s just what I personally witnessed in a few years in the industry.)
The collapse of the legal market in 2009 meant there was a flood of highly competent attorneys who found themselves in the temp market, and many find themselves still there (whether because they enjoy the freedom or because it remains their best opportunity). The work shouldn’t be devalued because of who did the job, but should be appropriately valued based on the content of the work product.
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Listen, if there was extra margin created by hiring the temps (above and beyond the standard associate markup), it isn’t cool for the firm to pocket the difference. But temporary attorneys are still real lawyers, and their work isn’t inherently worth less just because of their job status.
Judge Slashes $10M in Fees Over Firm’s Use of Temporary Associates [New York Law Journal]
Kathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).