Recently I had a doctor come to me for help sorting out a large legal bill he had incurred with a BIG law firm. He had a Medicare billing problem and had gotten into some trouble with the feds. Although he incurred several hundred thousand in legal fees from this BIG law firm, the firm did little to resolve his Medicare billing problems. So the cardiologist went to an attorney at a small firm who was able to quickly and satisfactorily the Medicare billing issues. The total bill from the new attorney at the small firm was less than $10,000.
The problems I found with the legal bills from the large firm filled a 12 page opinion letter. But beyond the individual billing issues, it was pretty clear to me in reviewing the BIG firm’s bills that the client had got caught up in what I call the “protocol of a BIG law firm.” It never fails, but whenever I do a legal bill audit of a BIG law firm’s legal bills, I always find the same things. What I find is that each BIG firm tends to approach any legal matter the same way which is to overstaff, overwork, overbill and overlook any real opportunities to quickly and efficiently resolve a matter for a client.
Why anyone would hire a BIG law firm for any type of litigation is beyond me. I have audited legal bills in all manners of BIG law firm cases including large complex environmental cases and patent and trademark infringement cases. I even reviewed legal bills in one of the nation’s largest bankruptcy cases that went to the U.S. Supreme Court. And I have found nothing in any of those cases that could not have been handled – and handled more efficiently and cheaper – by much smaller law firms. So why anyone would hire a BIG law firm when much smaller law firms could do is well beyond my comprehension.
Most insurers I am familiar with long ago learned that they were better off avoiding BIG firms and found that they got better results with less money by using small firms – even in more complex cases. Nevertheless, many insurers often do wind up having to hire a BIG law firm in situations where they must provide “independent” counsel or use insured chosen counsel.
While insurers occasionally may be forced to use a BIG law firm, they do not have to follow a BIG firm’s protocol of overstaffing, overworking and overbilling. Fortunately for insurers, “independent” or insured chosen counsel must follow the same ethical rules that apply to billing that panel counsel must follow. In fact, there is some case law that holds that independent counsel can be held to an even higher standard when it comes to billing for services. See Center Foundation v. Chicago Insurance Co., 227 Cal.App. 3d 547, 560 (2nd Dist. 1991)(court holding that Cumis counsel must engage in “… ethical billing practices susceptible to review at a standard stricter than that of the marketplace.”).
So when faced with a BIG case, resist the temptation to turn it over to a BIG law firm. Just look around and you can find any number of smaller law firms that can easily handle the case (often with better results) at far less cost. But if you do find yourself caught up in a situation where you must use a BIG law firm, make sure that you do not get caught up in overpaying for a BIG firm’s protocol by putting their legal bills through the same sort of scrutiny you use for reviewing panel counsel bills.