Ride the Lightning
Cybersecurity and Future of Law Practice Blog
by Sharon D. Nelson Esq., President of Sensei Enterprises, Inc.
DLA Piper Settles Overbilling (Churn That Bill, Baby!) Lawsuit
April 24, 2013
The New York Times reported recently that DLA Piper had settled an ugly fee dispute with client Adam Victor, an energy industry executive. The case highlighted lawyers’ e-mails that discussed overbilling the client, using the phrase “churn that bill, baby!”
DLA Piper had originally sued Mr. Victor for $675,000 in unpaid legal bills, in hindsight probably not a good idea. Mr. Victor then filed a counterclaim, accusing the law firm of a “sweeping practice of overbilling” and demanding $22.5 million in punitive damages.
On April 17th, a lawyer for Mr. Victor said the parties had settled though he declined to reveal the terms of the settlement, citing confidentiality provisions in the agreement. Mr. Victor appeared to be a pretty determined guy, so my guess is that the terms of the settlement were pretty darn sweet as DLA Piper scurried to sweep this embarrassment under the rug.
Mr. Victor had retained DLA Piper in April 2010 to prepare a bankruptcy filing for one of his companies. Mr. Victor ultimately refused to pay some of the bill saying that he had been overcharged, and the law firm sued him for nonpayment.
During pretrial document discovery, internal DLA Piper e-mails came to light:
“I hear we are already 200k over our estimate — that’s Team DLA Piper!” wrote Erich P. Eisenegger, a lawyer at the firm.
Another DLA Piper lawyer, Christopher Thomson, responded to the e-mail, noting that a third colleague, Vincent J. Roldan, was also recruited to work on the matter.
“Now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode,” Mr. Thomson wrote. “That bill shall know no limits.”
I was personally offended by the DLA Piper e-mail which tarred all lawyers, most of whom try hard to stay within estimates given to clients unless the scope of work changes.
DLA Piper, the world's largest firm, with 4,200 lawyers in 30 counties, could surely have set a better example. I found laughable the internal e-mail that the firm leadership issued defending the firm's integrity and suggesting that the e-mails that surfaced were a poor attempt at humor.
In fact I read that e-mail aloud to John in the car – it was so repetitious and labored (if you say the same thing enough times, did they think it would be more credible?) that I was finally convulsed with laughter.
The lawyers who wrote the offending e-mails are no longer with the firm, apparently for unrelated reasons. But what they wrote (and sorry DLA, most people believe that these e-mails constituted bona fide "chortling" over the bill's growing size) has once again made lawyers the butt of water cooler jokes. They have fueled the public perception that lawyers are sharks more interested in jacking up bills than in keeping legal costs in check.
We teach a lot of ethics CLEs – congratulations DLA Piper – for the foreseeable future, you've earned a slide in our PowerPoint.
Listen to the Podcast
