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Lombardi Law Firm

Contract Lawyer Fees Fuel Disagreements


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4/23/2013
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A current class-action suit against Citigroup Inc. initially involved investors claiming that the company was not forthcoming with regard to their exposure to mortgage debt.  Now the proposed settlement is meeting opposition based on a different issue – the amount of fees the plaintiffs’ attorneys are demanding.  The fee amount requested is close to $100 million, a 16.5% share of the $590 million settlement.  Ted Frank is leading the charge to oppose the settlement, arguing that the plaintiffs’ law firm obtains contract attorneys to conduct routine legal work at a reasonable price and then inflates the billing charges assessed to the client.  Many argue that it is commonplace to markup the clients’ fees due to the risk that the firm accepts when they take a high-profile case, and that using contract attorneys to review voluminous documents is a reasonable allocation of firm resources.  Those in favor of such markups say that the amount billed to the client is expected to be higher than what the firm paid to the contract attorney for their services, but that it is merely a matter of making that markup reasonable.  People on the other side of the argument, like Ted Frank, argue that the billing charges assessed to clients are entirely unreasonable and create an unfair windfall to the law firms.  The persistent issue is that so many clients blindingly trust big firms to charge them fairly, when there may be many instances where the party making the biggest profit is the law firm that outsources tedious work so that they can enjoy an easy payday.



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