Kasowitz Legal Malpractice Case Shows Hourly Billing Pitfalls

A former client is suing the national law firm Kasowitz Benson Torres LLP for alleged fraudulent billings and legal malpractice.

The firm, which has an office in Miami, gained national attention due to partner Marc Kasowitz’s role as outside counsel to President Donald Trump.

A recently filed lawsuit alleges that the firm’s representation of the Fort-Lauderdale based Patriot National, Inc. was marred by “flagrant disregard for the trust its client placed in it,” citing alleged misconduct such as 24 hours of service billed in a single day, 2.7 hours billed for e-filing a document, and duplicative billing.

Law firm overbilling is inexcusable, but it is unfortunately common with hourly billing.

While law firm overbilling is inexcusable, it is all-too-common under the hourly billing model that dominates complex commercial litigation. Contingency-fee litigation from the Business Trial Group offers clients an alternative to hourly billing. When you hire us to handle your case, you pay no hourly fees, and no fees at all unless we are successful.

To discuss your case for free with an attorney, contact the Business Trial Group.

Lawsuit Alleges “Egregious Misconduct”

Patriot National provides outsourcing services to insurance companies. The company approached the Kasowitz firm in February 2016 about prospective legal services, according to a lawsuit filed in Broward County, Florida. Kasowitz went on to provide legal services to Patriot National in connection with four lawsuits. In less than a year, the firm racked up more than $3.4 million in legal bills.

Kasowitz was not approved counsel for the insurance company providing coverage for defense costs, the lawsuit asserts, causing Patriot National to needlessly incur millions in attorneys’ fees. Patriot National later retained insurer-approved counsel, which allegedly had to re-do the services Kasowitz provided.

Patriot National’s lawsuit asserts that it paid Kasowitz $2 million for services that “did not appreciably further” its interests. Kasowitz’s invoices, moreover, contained significant improprieties, the suit claims.

Patriot National filed the lawsuit after Kasowitz sued for unpaid legal fees. The action seeks recoupment of legal fees paid and “turns on fraud, greed, extortion, and other blatant misconduct—all by a defendant that is supposed to be working for justice,” states the complaint.

Patriot National cites numerous instances of “fraudulent billings, malpractice, and other egregious misconduct.” For example, the Kasowitz firm is alleged to have:

• Assigned as many twenty-five billers for a single matter
• Billed 24 hours on drafting tasks in a single day by a single biller, and 154.4 hours for a single, non-trial day among colleagues
• Billed 83 hours to assemble binders
• Submitted generic or cryptic billing entries such as “reviewing materials” and “taking notes”
• Accrued billable hours that were difficult to countenance, such as a single biller working 17 hours per day on 7 different occasions, and 35.6 hours over a two-day period
• Used a subsidiary to charge thousands of dollars for non-legal “professional services”

Patriot National’s lawsuit against the Kasowitz firm cites causes of action for fraud, professional malpractice, breach of fiduciary duty, and breach of contract.

Billable Hours Incentivize Overbilling

Kasowitz Benson Torres is not the first high-profile law firm to get caught up in an overbilling dispute.

DLA Piper—the world’s largest law firm—was recently embroiled in an overbilling scandal that produced some smoking gun emails. One email from a DLA Piper attorney described, “random people working full time on random research projects in standard ‘churn that bill, baby!’ mode.”

“Most lawyers are ethical, but the billable hour creates perverse incentives.”

This widely publicized episode did little to quell the public perception that lawyers are more interested in amassing legal bills than obtaining justice for their clients. It also raises the question of whether overbilling is built into the hourly billing system.

More than half of respondents to a survey from Samford University’s Cumberland Law School acknowledged that billing additional time influenced the work they did. Nearly 35 percent admitted to engaging in double billing. William G. Ross, an expert in billing ethics who performed the survey, said, “most lawyers are ethical, but the billable hour creates perverse incentives.”

The perverse incentives of hourly billing can result in attorney practices such as:

• Double billing
• Padding hours
• Billing for trivial, low-level tasks
• Vague billing entries
• Upbilling (rounding up hours)
• Block billing (listing a group of tasks in a single “block“ entry)
• Improperly billing for personal expenses and overhead expenses

Overbilling is a problem at firms of all sizes that use the hourly billing model. At many firms, partnership and promotion is largely determined by how many hours an attorney can bill clients for. This increases pressure to maximize one’s billable hours.

Hourly billing may be good for lawyers, but it is bad for clients, who are not even guaranteed a good outcome after paying an attorney hundreds (and in some cases, thousands) of dollars per hour.

As a result, clients are demanding more alternative fee arrangements such as contingency-fee litigation.

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Contingency-Fee Business Litigation Offers Better Client Value

Another problem with hourly billing is that it allows wealthy entities to use attorneys’ fees as leverage against smaller opponents to force an unfair settlement. Large corporations essentially turn litigation into a war of attrition and rely on their superior resources to tilt the playing field in their favor.

The Business Trial Group handles all business litigation cases on a contingency-fee basis because we believe that everyone deserves access to great legal services. Contingency-fee business litigation ensures that every decision an attorney makes is in the client’s best interest and focused on maximizing their recovery.

We only take on cases we believe we can win, and if we do not win, our clients pay us nothing. There are no tricks or hidden fees. You pay only for results, not hours.

If you are involved in a business dispute, contact the Business Trial group for a free case review.