The law firm DLA Piper has settled a fee dispute with one of its clients, resolving a case that highlighted lawyers’ e-mails that discussed overbilling the client, in one instance using the phrase “churn that bill, baby!†to describe their work.
The e-mails surfaced in dueling lawsuits between DLA Piper and Adam H. Victor, an energy-industry executive. After DLA Piper sued Mr. Victor for $675,000 in unpaid legal bills, Mr. Victor filed a counterclaim, accusing the law firm of a “sweeping practice of overbilling†and demanding $22.5 million in punitive damages.
On Tuesday, the parties resolved the matter, according to Larry Hutcher, a lawyer for Mr. Victor. Mr. Hutcher declined to discuss the terms of the settlement, citing confidentiality provisions in the agreement. It is unclear whether DLA Piper dropped its claim or paid Mr. Victor damages.
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, and DLA sued him for nonpayment.
During pretrial document discovery as part of the litigation, internal DLA Piper e-mails surfaced that suggested the firm had a lax attitude about the size of Mr. Victor’s bill.
“I hear we are already 200k over our estimate â€" 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.â€
The DLA Piper e-mails were the focus of an article last month in The New York Times about the issue of billing by law firms and the public’s perception that firms run up bills by overstaffing assignments and performing wasteful tasks. Legal ethics professors said that the e-mails highlighted the perverse incentives of the billable-hour system. Often, they said, a lawyer’s financial interest in maximizing billings runs counter to the client’s interest in keeping legal costs low.
A spokesman for DLA Piper, the world’s largest law firm with 4,200 lawyers across 30 countries, did not respond to requests for comment about the settlement. But last month, on the day the Times article was published, DLA Piper’s leadership sent a firmwide e-mail defending its ethics, integrity, and reputation for high-quality and cost-efficient legal services. It also gave its lawyers suggestions for how to discuss the “inappropriate e-mail humor†with clients.
“It is unfortunate that the unprofessional behavior of these lawyers by writing those e-mails has distracted attention away from the fact that a client refused to pay his bills,†the statement said.
