New York Real Estate Lawyer Blog
The huge law firm, Reed Smith, is facing suit over fees paid by one of its former not-for-profit clients. Law.com reports that the not-for-profit alleges that the high demands on partners to increase profits ultimately led to “excessive” fees in a routine employment discrimination case, originally quoted to be $50,000 but ballooned to reportedly more than $960,000.
Recent litigation brought by the foundation is proceeding on several grounds, including breach of contract, breach of fiduciary duty, fraud and legal negligence. In permitting the case to move forward the judge ruled that the client faithfully paying fees to the law firm did not mean that they could not later complain about their excessive nature. Good news for clients who pay their fees.
According to the court,
“The complaint has specifically alleged billing fraud, excessive billing, and billing for unnecessary services (fee-churning) and secretly elevating billing rates without the consent of the plaintiff and related allegedly improper billing practices.”
According to the report by Law.com, the claims by the not-for-profit related to “fee-churning,” survived dismissal. [Definition: One example of fee churning might be where the law firm assigns multiple associates and partners who all review and re-review each correspondence, pleading, or other legal document].
The complaint reportedly alleges that the law firm overstaffed the case, failed to describe billing entries by subject matter or activity, secretly raised the rates of the lawyers billing and at rates which exceeded those promised, according to the report in Law.com.