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August 30, 2006
Third Big Firm Overbilling Scandal
Forget stock option backdating; the real emerging scandal is big law firm billing practices. In the past month, we've had public scrutiny of the billing practices at old-line white-shoe NY firm Wilkie Farr, DC/Boston powerhouse WilmerHale and now the latest--1200 attorney national firm Holland & Knight. What big brand is headed for the fall next?
The Holland & Knight story is terrifying for every big firm client. Stated baldly, allegedly a partner at the firm treated invoices as works of fiction, manufacturing new hours/entries to increase the bill. Allegedly, this added up to at least $100,000 of overbilling, but this could be massively understated. Allegedly, the partner-in-question justified the billing by saying that he himself had done work that wasn't billed to the client, so the partner grossed up other people's time to adjust the bill to the actual accrued amount. This is not only unpersuasive, it may still be actionable--I tested on this exact practice last Spring (see exam and sample answer).
All of this alleged misconduct was identified by a junior partner on the firm, who escalated the matter internally until he reached a brick wall. He then ratted out the firm to the disciplinary authorities under MRPC 8.3, with a predictable adverse consequence to himself. He is now gone from the firm, working at a lower-paying and less prestigious firm, and trying to defend his reputation. Meanwhile, it's unclear if the disciplinary authorities are going to do anything about it. The firm settled with the insurance company that paid the bills; I have to assume that some money was rebated.
Let's be clear why the overbilling problem is so insidious:
* overbilling could be rampant among all lawyers. There are plenty of incentives to cheat (for associates, billable targets; for partners, compensation based on books of business)--recall the scandal when Clifford Chance associates hinted that they were pressured to overbill? As Patrick Schiltz argued so persuasively in 1998, the entire overbilling process becomes part of an attorney's socialization to the industry. However, I disagree with those who think this is a big firm problem--in my class we cover some situations (In re Lawrence; In re Glasbrenner) where small firm lawyers have gotten their hand caught in the cookie jar too.
* Overbilling is the "perfect crime" (as quoted in the WSJ) because it's hard to detect. Having said that, we shouldn't ignore the client's responsibility to police firms more carefully.
* There is no incentive for anyone at the law firm to whistleblow against the firm--it will come at significant personal cost, and meanwhile everyone benefits from riding the gravy train so long as they keep quiet. So it becomes a culture of silence, and the putative enforcement mechanism (self-policing) simply isn't adequate to overcome this. Kudos to Matthew Farmer for his act of courage despite the adverse consequences.
The solution to overbilling is simple to state but hard to effectuate--get rid of hourly billing. FWIW, when I was GC at Epinions, I typically sought fixed-fee billing arrangements with my outside counsel. Some were receptive; others were not. When I do my side gigs now, I almost always do fixed-fee billing. Fixed-fee billing creates other problems, but it should eliminate many of these egregious overbilling situations.
Posted by Eric at 04:13 PM | Legal Industry | Comments (2) | TrackBack
August 24, 2006
What if He Had [Barked] [Crowed] [Moo'ed] Instead?
The AP ran a crazy, crazy story of prosecutorial discretion gone amok. Neighbor 1's cat uses neighbor 2's garden as a littlerbox. Neighbor 2 complains to police. Neighbor 1 gets rid of the cat, which upsets the 14 year old son. Son then meows at neighbor 2 every time he sees her (he says he only meowed twice). Son is then criminally prosecuted for misdemeanor harassment....
....for meowing.
Now, admittedly, there could be some meows that cross the line. Meowing at the top of one's lungs 24/7 might very well be criminal (see this analogous example). A meow directed to cause some other harm (like meowing in a way that causes a dog to charge neighbor 2) might be criminal. But meowing during chance encounters between neighbors, even if the meow is communicated with maximum snarkiness, is not a crime. And even if somehow it is, I would think the prosecutors would be way too busy with real crimes to notice.
Assuming that meowing could be a crime in this circumstance, I can't help but wonder: with its lyrics, could singing "Old McDonald" become a felony?
To this, all I can say is: WOOF! (Oops, please don't arrest me!)
Posted by Eric at 08:50 AM | Legal Industry | TrackBack
August 23, 2006
Administrative Duties as Academic Director
When I was considering the opportunity to become Academic Director of the law school's High Tech Law institute, a lot of people warned me that the administrative duties would cut into my time for scholarship. I knew this would be true, but after last week I can put better parameters on the time allocation. Last week, my administrative role included:
Monday: 1 hour meeting regarding curriculum matters; 1/2 hour on adjunct relations
Tuesday: 1 1/2 hour meeting with admissions regarding general admissions matters and preparation of marketing collateral; another 1/2 hour reviewing marketing collateral
Wednesday: nothing!
Thursday: 2 hour meeting to discuss strategic planning; 2 hour meet-and-greet with incoming first years
Friday: 1 hour research on curriculum review; 2 hour meeting regarding curriculum planning for Spring semester; 1 hour meeting with an LLM student to discuss his thesis paper; another 15-30 minutes on adjunct relations
There was probably another couple of hours on various event planning and scheduling sprinkled throughout the week. So, by my count, this week required about 15 hours about administrative matters. Now, some of this time reflects my learning curve/ramp up investment. And don't get me wrong--I'm not complaining. I actually enjoy these duties. But, I can't help but note that the semester hasn't even started yet.
Posted by Eric at 07:01 PM | Life as a Law Professor | TrackBack
August 20, 2006
Froogle Demoted
When I was at Epinions, we knew Froogle was coming. Needless to say, this was the source of some consternation. Google had traffic (and lots of it), money (and lots of it) and, well, mojo (and lots of it). So there was some concern that Froogle was going to be a game-changer in ways that would adversely affect Epinions.
That was before we learned that not everything Google touches turns to gold. So when Google recently "demoted" Froogle by removing it from one of the coveted home page/search page links, it was a tacit admission that Froogle hasn't taken over the world. I can only assume that Froogle's traffic is going to drop substantially; and I for one have never found Froogle all that useful. Google's failure to hit a home run is a pretty dramatic development for those in the shopping comparison business.
I do think there's a lesson to take away from this. While a start-up can't ignore the competition, it shouldn't overreact either...and in Google's specific case, it is temptingly easy to overreact when Google moves into a business given Google's spotty history with new projects.
UPDATE: The likelihood of Froogle's demise is growing, with Google saying that it will "de-emphasize" Froogle, eliminate it as a standalone site, and integrate Froogle's results into its standard search results page.
Posted by Eric at 09:47 PM | Former Employers | Comments (1) | TrackBack
August 15, 2006
Another NY BigLaw Partner Caught Lying to His Firm
In the Matter of William P. DiSalvatore, 2006 NY Slip Op 06210 (NY App Div Aug. 10, 2006). The NY Lawyer story.
William P. DiSalvatore was a partner at WilmerHale, a major national firm. He was also a rising star as a patent litigator--the National Law Journal had picked hm as one of the top IP litigators under 40. Despite this bright promise, he's no longer an attorney. Instead, he resigned from the bar (and his firm) for a variety of serious misconduct, including:
* taking on friends and family as putative pro bono clients to get them free legal work
* falsely billing time to other pro bono clients
* submitting $109,000 of expense reports for non-reimbursable personal expenses
* forging client signatures on conflict waivers
* telling a client that a brief was still in draft form when it had already been filed
DiSalvatore's story follows the recent story of Patrick Carmody, another NY lawyer busted for deception (in that case, running up 6 figures of "free" personal telephone calls misallocated to clients). I just don't understand these situations--what causes very successful and well-compensated professionals to make such poor choices?
Posted by Eric at 09:32 AM | Legal Industry | Comments (2) | TrackBack
August 14, 2006
What Law Students Want From Law Professors
James B. Levy, As a Last Resort, Ask the Students: What They Say Makes Someone an Effective Law Teacher, 58 Me. L. Rev. 50 (2006):
"[T]he profile of the ideal law school professor from the students' perspective is someone who is an expert in her field, projects confidence about that expertise, respects students, cares that they learn, and has great enthusiasm for teaching. Somewhat surprisingly, characteristics that we usually presume to be very important to students, such as teacher's learning students' names, the ability to entertain students in class, or socializing with them outside of class, were not as important to students as we often believe."
But what about professor sexiness?
Posted by Eric at 08:31 PM | Legal Education Industry , Life as a Law Professor | TrackBack
August 11, 2006
Sexy Professors are Better Professors (?)
I couldn't read this report without hearing the 1970s Rod Stewart song in my head: "If you want my body and you think I'm sexy, come on sugar let me know."
I've previously blogged on Ratemyprofessor.com, the role of sexiness in student evaluations, and the limitations of anonymous student feedback. See here and here. This report took the entire Ratemyprofessor.com dataset, regressed it for correlations between "quality" of instruction and professor "hotness," and found a 0.64 correlation between the two. The authors try to discuss with a straight face the possibility that there may be a recursive effect where students find teaching brilliance as sexy...hah! (They write: "most student comments point toward Quality as a function of Hotness when they focus on physical characteristics of their professors that could be captured in photographs"). Ruling out this possibility, it is almost impossible to reach any other conclusion than that, in this dataset, sexiness contributes to assessments of professor quality.
So what take-away points can we get from this? The authors cite this as another reason to believe that student evaluations of teaching are generally unreliable. ("Taken as a whole, these self-selected evaluations from Ratemyprofessors.com cast considerable doubt on the usefulness of in-class student opinion surveys for purposes of examining quality and effectiveness of teaching.") If, in fact, student evaluations are influenced by such factors as professor attractiveness, then there is good reason to be suspicious of them. I am planning to attach this article as part of my tenure review package to explain some of my teaching evaluations (I'm making the highly defensible assumption that this factor is working against me, not for me).
It seems there might be another obvious conclusion to draw. If I want to improve my teaching evaluations, I should not invest more time in class preparation or subject material mastery. Instead, I should hit the gym.
Seriously, though, it would be easy to overinterpret this study as it relies on self-selected data (students opine at Ratemyprofessor.com voluntarily). But this report has some very troubling implications for gender, age, race and physically challenged bias in student evaluations (the data also shows possible bias based on discipline--apparently, geeky scientists get hit hard on the sexiness-o-meter). At minimum, it is a good reminder that any evaluation metric (such as, in this case, the metric for evaluating professor teaching performance) must itself be evaluated for credibility. In the case of student evaluations, it is way too easy to overweight the precision of the "numbers," when the entire numerical dataset might be skewed by bogus exogenous factors (like sexiness).
Posted by Eric at 10:13 PM | Life as a Law Professor | Comments (1) | TrackBack
August 05, 2006
Teaching the Context of Contract Drafting
At the ABA Annual Meeting, I was on a "train the trainer" panel with Sue Irion, Tina Stark and Charles Fox regarding the teaching of contract drafting. I talked about how to teach the substantive law that underlies contracts. Because this applicable law differs by contract, there was no way to address which laws should be taught. Instead, I tried to develop a taxonomy of subjects that should be covered in the training process. It turns out that I covered many of these topics in my Contract Drafting course, but this taxonomy helps identify some holes in my coverage and some new ways to organize the material. My slides.
Posted by Eric at 05:59 PM | Life as a Law Professor | TrackBack
August 01, 2006
Biglaw Partner Suspended 1 Year for Billing Clients for Personal Telephone Calls
In re Matter of Carmody, 2006 NY Slip Op 06058 (NY App Div July 27, 2006). The NY Lawyer writeup.
Patrick Carmody was a former partner at NY's Willkie Farr, where he made about $1,000,000/year. During 2001 and 2002, he made a total of 129 hours of personal International telephone calls costing a total of about $30,000. Instead of paying for these calls himself, he charged the calls to various clients by accessing their billing codes before making the calls or by listing the billing code on timesheets. His defenses were that he he was experiencing a lot of personal stress and he was trying to hide the amount of time he was spending on personal matters from his partners. Despite these (weak) defenses, a disciplinary board called his actions "simple thievery," and he received a one year suspension of his license.
UPDATE: My Shingle blogs on the topic. Check out the comments.
Posted by Eric at 09:27 AM | Legal Industry | TrackBack