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Press coverage of Citigroup Securities Litigation contract-lawyer fee request

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Daniel Fisher has put some shoe-leather into the case of the trial lawyers claiming that their contract attorneys doing low-level document review have lodestar rates of $350 to $550/hour (and thus should be billed to the class at $1000/hour for their "success" in negotiating a nuisance settlement with Citigroup): January 2 and January 4, resulting in piggyback coverage from the ABA Journal (and see their comments) and Bloomberg.

As a JD Underground thread points out, I was insufficiently cynical in claiming these attorneys were being paid $40-45/hour; Fisher's research suggests they were being paid $32/hour.

I should note that this is not a question of whether class counsel can ever ask for a 30x markup. I am not asking for any change in the law here: the law of lodestar is that the lodestar rate corresponds to the market rate paid by paying clients for an attorney doing the level of work being done. It's just that paying clients in this decade don't ever actually pay $350-$550/hour for first-tier document review.

The parties backed down on the question of whether notice was adequate and agreed to re-notice the class, with a March 8 deadline for objections and April 8 for the fairness hearing.

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One quibble: clients often do pay $350-$550 for document review, if that review is done by lawyers at the retained law firm. What they don't pay that much for is document review by contract attorneys.

In essence, the use of firm lawyers is an indication by the firm that they believe the review is important enough it warrants the time and attention of their own hand-selected, well-trained, thoroughly-groomed, salaried lawyers. In contrast, work by contract attorneys is an indication by the firm that they believe these documents only need a basic review by a minimally competent lawyer.

IMHO, work by attorneys on the case should be compensated at market rate (plus enhancements as appropriate for the case), because it is done at risk to the attorneys themselves; you could spend 5,000 hours on a class action and get nothing, and thereby end up being the least profitable lawyer at the firm. In contrast, these contract attorneys weren't actually on the case, they were paid a sum and then left, more like an outside vendor than a lawyer.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.