According to the terms of the NFL concussion settlement, the players involved were assured that “no part of the $765 million deal would go to lawyers.” That statement may not have been entirely true.
As we reported at the end of 2011, the Jerry Sandusky sex scandal was supposed to cost Penn State a few million in legal fees, but the cost to date has now reached $49.4 million for legal and consulting services. This recent figure represents work by more than three dozen firms that charged Penn State between November 2011 and June 2013. With the university providing monthly updates, this means that the cost has increased by almost $1.7 million since June of this year alone.
An article in the Los Angeles Times this week investigated the enormous amount of legal fees that cities in California have racked up over the past several years while dealing with corruption scandals. Long after the officials are dishonorably discharged from their positions (and often indicted), many cities are still facing sky-high legal bills in the wake of municipal corruption – a tab that tax payers are rightfully unhappy about. Perhaps surprisingly, most of the legal fees aren’t paid to cover the representation of the disgraced city official (generally, they have to pay for their own attorneys), but for “defending the city from related lawsuits or complying with requests from investigating agencies.”
The disparity in legal fees charged by the highest-billing lawyers and those at the bottom is growing larger, reports Thomson Reuters. The results from a 4 year study spanning 2007-2011 conducted by TyMetrix Legal Analytics and Corporate Executive Board gathering data from 4,000 law firms, including 120,000 individual attorneys, were released on Monday. The finding of an average increase in billing rates of 4% from 2009 to 2011 is certainly unsettling; however other study results are arguably far more alarming.
Acknowledging the dramatic changes to the legal market over the last few years, an attorney recently wrote an advice column on the blog Above the Law to his fellow lawyers: in a buyer’s market, firms ought to make some concessions to clients. By not charging clients for the little things, attorneys will garner the goodwill of their existing clients, and attract new ones, or so the wisdom goes.
According to a recent study conducted by the Daily Report, hourly billing continues to be the most common billing model on legal invoices. Additionally, hourly rates of partners and associates increased in 2011.
The Daily Report collected approximately 6,000 hourly rates from 2011. A majority of these rates were collected from Chapter 11 bankruptcy filings in five U.S. bankruptcy courts, including the Southern District of New York and the District of Delaware.
The New York Times recently reported that the legal cost to defend three former executives of Fannie Mae and Freddie Mac is approaching $100 million. Taxpayers have already covered almost half of the tab.
The inspector general of the Federal Housing Finance Agency, the entity overseeing both companies as their conservator, is trying to protect taxpayers from further unnecessary and excessive costs. In its report on the matter, the inspector general remarked that when the companies were taken over in September 2008 their legal contracts could have been repudiated but were not. As a result, taxpayers are bearing the costs ever since. The report suggests that these legal fees should be the subject of Congressional oversight to control costs.
The Los Angeles Times recently reported that Facebook is firing back at Paul Ceglia, a New York man claiming to own a stake in Mark Zuckerberg’s social networking site. Facebook would like Ceglia to pay the legal fees it incurred defending his claim that he owns half of Zuckerberg’s multi-billion dollar share.
The Washington Post recently reported that the use of alternative fee arrangements in law firms has not only become much more prevalent but has also contributed to an increase in client billing. The Post notes the success of “flexible” and efficient billing strategies among small law firms and the digression from the individual hourly rates system.
While many municipalities in New Jersey are struggling with dramatic cuts in state municipal aid, the City of Hackensack has particularly felt the effects within the last two years. The City of Hackensack’s legal bills have risen over the past two years to astronomical numbers, particularly because of the glut of legal problems generated by police-related cases. In 2010, over $1.4 million was paid by the city in legal fees, and in 2011, an estimated $1.7 million was paid out, though the 2011 figures are subject to change as we near the end of the fiscal year.