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Judge wants review of legal bills after firms reveal 9,000 hours of 'inadvertent' double-billed time

A federal judge in Boston is proposing the appointment of a special master to review the accuracy of legal bills submitted by several prominent law firms—and is suggesting the firms pay the costs of the probe.

U.S. District Judge Mark Wolf proposed in the Feb. 6 memorandum and order (PDF) that up to $2 million in special master costs be paid from nearly $75 million in attorney fees that had been awarded to plaintiffs’ counsel in their settled suit against State Street Bank, the Boston Globe reports. The class action had contended the bank overcharged its customers in connection with certain foreign exchange transactions.

Wolf cited a report by the Boston Globe Spotlight team that found three law firms submitted some charges for the same lawyers, often with differing hourly rates. Some of the hourly rates listed in the legal filings were as much as 10 times more than what the lawyers generally earned, according to the newspaper’s report.

One of the firms, the Thornton Law Firm of Boston, submitted bills showing an hourly rate of $425 for staff attorneys, but one of those lawyers told the Boston Globe he was paid only $30 an hour for his work. The Thornton firm was recently in the news as a result of a Boston Globe report that claimed partners at the firm who made Democratic campaign donations were reimbursed with law firm bonuses.

Wolf proposes that recently retired U.S. District Judge Gerald Rosen of Michigan be appointed as special master to review the accuracy and reliability of representations made in the legal bills, to report on whether misconduct occurred, and if so, to recommend whether the misconduct should be sanctioned.

Nine law firms shared in the legal fees. Besides Thornton they included class-action law firms Labaton Sucharow, the lead law firm in the State Street case, and Lieff Cabraser Heimann & Bernstein. According to the Globe, Thornton has a “lucrative partnership with Labaton Sucharow in which Thornton often finds potential legal clients for the much bigger New York firm.”

After Globe reporters contacted Labaton Sucharow for its story on the legal fees, the law firm submitted a letter to Wolf acknowledging “inadvertent errors” in written billing submissions.

Seventeen staff lawyers in Thornton’s report were also listed as staff attorneys on Labaton’s report, the letter said. And six of the staff attorneys in Thornton’s report were also listed as staff attorneys on the report by Lieff Cabraser.

In all, the firms overbilled by about $4 million and double counted about 9,000 hours, the letter revealed. The duplicative time has been removed, the letter said, and when differing billing rates were listed for a given staff attorney, the time will be claimed at the lower rate.

Hat tip to Bloomberg Big Law Business.