Dallas law firm Rose • Walker is representing software company McAfee in its suit against New York (?) law firm WilmerHale for overbilling McAfee while losing the securities fraud case of its former CFO, Prabhat Goyal. WilmerHale’s team of former prosecutors billed McAfee $12 million to lose Goyal’s case in federal court in San Francisco. (To their credit, they did try the case rather than rushing Mr. Goyal in to chat with the U.S. Attorney, though a cynic might wonder whether that was because the company was paying the bill.)
Judge Mark Rusch of the 401st District Court in Collin County, Texas this week allowed McAfee’s fraud claim against WilmerHale to continue, but dismissed claims of breach of fiduciary duty, breach of contract, and gross negligence (ABA Journal, via Law of Criminal Defense).
(Lagniappe: Rusch was the Judge who recently signed a warrant for the search of the criminal-defense lawyer’s office in a murder case before his court.)
$12,000,000 sounds like a lot of money. It might even be too much money for the defense of a complex federal fraud case, including a five-week jury trial. The plaintiff complains about “almost $200,000 in expenses for luxury hotel rooms, limousines and charges for room service and bar tabs” (Texas Lawyer).
I’m a big believer in living in comfort while in trial away from home. Luxury hotel rooms, cars, room service and bar tabs all sound like necessary trial expenses to me. Assuming that “a handful” equals six associates, WilmerHale spent $5,000 per person per week in trial in San Francisco. That doesn’t shock my conscience; a room at the Mandarin Oriental will eat up most of that amount.
The defense says that “over 80 percent of the defense work was done by two lead WilmerHale
partners and a handful of associates. The bulk of other timekeepers
were needed for review of 1.2 million documents in the case.” Of course WilmerHale billed the client more than it was paying those “timekeepers”; that’s how BigLaw partners get paid. So baby lawyers doing document review are being billed at maybe $200-plus per hour and getting paid maybe $75-plus per hour when their services in the real world are worth maybe a third that.
It’ll be interesting to see how a Texas jury reacts to D.C. firm Williams & Connolly’s (there’s that elusive &!) explication of BigLaw billing practices. $12 million equals six lawyers at $500 per hour per lawyer full time for two years; that is a lot of money to defend a crook; a conservative Collin County jury may think it’s too much money, and may look for any excuse to ding the defense lawyers.
It is a lot of money — twice what Fabio Ochoa Vasquez paid Roy Black to defend him in Miami. Without BigLaw’s cost-plus billing practices, McAfee could have funded a world-class defense for much less money. There are hundreds of criminal-defense lawyers in boutique firms and solo practice — real criminal-defense lawyers — across the country who would happily have put together an outstanding team to defend Goyal for half or a fourth what WilmerHale charged.